Custody Bank of Japan, Ltd.
DISCLOSURE

Note: This translation is provided for reference
purposes only, and the Japanese original
supercedes it in case of any discrepancy.

Management Message
We would like to express our sincere appreciation for your continued support.
Our Company was established on July 27, 2020 through the merger of three companies: JTC Holdings, Japan Trustee
Services Bank and Trust & Custody Services Bank. Based on our corporate philosophy of “As Japan’s No. 1 bank specializing
in asset administration, we shall contribute to the sound development of economy and society by playing a role in thedevelopment of asset management businesses and the asset formation of the people of Japan,” all of our executives andemployees shall make further efforts as asset administration professionals, aiming to be the best partner to respond to thediverse needs of our clients by responding to the changes in the environment as well proving worthy of the trust of society as afinancial infrastructure by providing high-quality and stable services.
We look forward to your continued support.

Custody Bank of Japan
President & Representative Director

Yoshikazu Tanaka

Logo and Corporate Motto
Our logo and corporate motto represent our Company’s image and resolve to contribute sustainably to the sound developmentof the economy and society by ensuring the trust of our customers and financial markets through the provision of stable services
as Japan’s leading asset administration bank offering a wide range of custody services.

● Logo● Corporate Motto

The Reliable Bank

The abbreviation of Japan Custody Bank, “CBJ,” isdesigned in the motif of a golden spiral drawn according to
the golden ratio, which evokes a sense of utmost stability
and beauty in humans.

Becoming the one and only bank that can garner trust in
response to changes in the environment. Bearing in
mind our status as The Reliable Bank, each and every
one of our employees is committed to nurturing Japan
Custody Bank.

Corporate Philosophy, Vision and Action Guidelines of
Custody Bank of Japan

Corporate Philosophy
As Japan’s No. 1 bank specializing in asset administration, weshall contribute to the sound development of economy andsociety by playing a role in the development of asset managementbusinesses and the asset formation of the people of Japan.

Vision● We respond to the trust of society as a financial infrastructure byproviding high-quality and reliable services.
● We aim to become the best partner for our customers by meeting
their diverse needs and managing the changing environment.
● We shall always be the company that takes pride in being an asset
administration professional in which employees work to their fullpotentials.

Action Guidelines● Acknowledging our social responsibility, we shall act with a sense of ownershipand integrity.
● We shall place our customers first and provide high-quality services that satisfy
them.
● In compliance with laws, rules and social norms, we shall be sincere and fair in
our conduct.
● We shall respect and trust each other and create an open and active work
environment.
● We shall tirelessly improve ourselves to acquire advanced expertise and skills.

Review of Business Performance····························· 11
Introduction of Our Company’s Business ················· 12

CONTENTS

Initiatives for Improving Processing Quality ·············· 15
Initiatives for Regulatory Reforms, Etc.····················· 16
Risk Management System ······································· 17Compliance Systems ·············································· 19

Corporate Data ···················································· 02

Internal Audits ······················································· 20

Corporate Governance ········································· 04

As a Public Institution (Disaster Prevention Measures) ···· 21

Strengthening Initiatives for SDGs ························ 07

Financial Section ··················································· 23

Action Policy on Fiduciary Duty ···························· 10

1

Corporate Data (As of July 1, 2022)
Corporate Profile
Corporate name

Custody Bank of Japan, Ltd.
(Custody Bank of Japan, Ltd.)

Establishment

June 20, 2000

Location Head Office8-12, Harumi 1-chome, Chuo-ku, Tokyo, 104-6228
Harumi Island Triton Square Tower Z
 Harumi Branch Office
8-11, Harumi 1-chome, Chuo-ku, Tokyo, 104-6107
Harumi Island Triton Square Tower Y

Capital stock¥51.0 billion

Shareholders

Sumitomo Mitsui Trust Holdings, Inc.

680,000 shares (33.3%)

Mizuho Financial Group, Inc.

550,800 shares (27.0%)

Resona Bank, Limited

340,000 shares (16.7%)

The Dai-ichi Life Insurance Company, Limited

163,200 shares ( 8.0%)

Asahi Mutual Life Insurance Company

102,000 shares ( 5.0%)

Meiji Yasuda Life Insurance Company

91,800 shares ( 4.5%)

Japan Post Insurance Co., Ltd.

71,400 shares ( 3.5%)

Fukoku Mutual Life Insurance Company

40,800 shares ( 2.0%)

Number of employees 1,980 (as of March 31, 2022)* The number of employees includes personnel seconded from Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank, Resona Bankand other companies (553).

URL

https://www.custody.jp/

Lines of Business Securities administration business, trust and banking businesses pertaining to asset
administration, business related to Japanese Master Trust
Long-term rating Japan Credit Rating Agency, Ltd. (JCR)AA +Rating and Investment Information (R&I)

AA-

Moody’s

A1

History
On July 27, 2020, three companies, Japan Trustee Services Bank (surviving company after the merger),
Trust & Custody Services Bank, and JTC Holdings, merged to form Custody Bank of Japan.
As Japan’s first trust bank specializing in the asset administration business, Japan Trustee Services Bank
was established by Daiwa Bank (currently, Resona Bank) and Sumitomo Trust & Banking (currently, Sumitomo
Mitsui Trust Bank) in June 2000. Capital participation by Mitsui Trust Holdings (currently Sumitomo Mitsui TrustHoldings) in September 2002.
Trust & Custody Services Bank was established by Mizuho Trust & Banking, The Dai-ichi Life Insurance,
Asahi Mutual Life Insurance, Yasuda Life Insurance (currently Meiji Yasuda Life Insurance) and Fukoku MutualLife Insurance in January 2001. Capital participation by Japan Post Insurance in October 2016.
JTC Holdings was established in October 2018 as a bank holding company with the existing shareholdersof Japan Trustee Services Bank and Trust & Custody Services Bank as shareholders.
2Organization Chart
Internal Audit Department
Planning and Administration Departments
Corporate Strategy Department
Human Resources & General Affairs
Department

Operations Planning Department
System Planning Department
Risk Management Department
Compliance Department
System Risk Management Department
Trust Consolidation Department

Customer Service Division
Business Promotion Department
Fiduciary Services Department
Insurance Accounting Department

DivisionManager

Collateral Administration Department
BPO Services Department 1
BPO Services Department 2
BPO Services Department 3

Business Operation Division 1
General Meeting of
Shareholders

Fund Accounting Department 1
Board of Directors

President & CEO
DivisionManagerFund Accounting Department 2
Domestic Custody Department 1
Domestic Custody Department 2

Board of Corporate
Auditors

Executive Management
Committee

Business Operation Division 2
Foreign Business Department 1

DivisionManager

Foreign Business Department 2
Corporate Actions Department
Overseas Administration Department

Business Operation Division 3
Overseas Custody Department 1
Overseas Custody Department 2

DivisionManager

Domestic Settlement Department
Treasury Department
Securities Lending ＆ Investment
Department

System Division
System Infrastructure & Engineering
Department
System Development Department 1
System Development Department 2
System Development Department 3

DivisionManager

System Development Department 4
System Development Department 5
System Development Department 6
EUC Management Department
System Operations Department

3

Corporate GovernanceFunctions, etc. of the Board of Directors and the Executive Management Committee ···············The Board of Directors makes decisions on important management matters and supervises the directors in the conductof their duties.
The Executive Management Committee (consisting of Executive Directors and Executive Officers with titles) is
responsible for deliberation, as part of the decision-making process in the conduct of business operations, regarding basic
management policies and important individual items. The Committee also works to share information and confirm thestatus of the execution of business activities. Its responsibilities also include reporting important information to the Boardof Directors.

Board of Directors and Nomination of Candidates for Directors ·············································
To fulfill its functions, the Board of Directors requires its members to have knowledge, capabilities and experience
necessary to perform all duties of our Company, including financial literacy, expertise in our Company’s practices, risk
management and compliance, in addition to their competence.
In nominating candidates for Directors, the Company takes into consideration the degree of satisfaction of the functionsof the Board of Directors, as well as individual knowledge, expertise and experience that can contribute to thecomplementary and effective functioning of the Board of Directors in addition to their competence.
Prior to the nomination of candidates for Directors (including those who are proposed to be reappointed with theexpiration of their terms of office), the Chairman of the Board of Directors convenes the “Performance Evaluation
Committee” consisting mainly of Independent Directors to examine the competence and capability requirements of thecandidates for Directors, and reports to the Board of Directors as necessary.

Functions, etc. of the Board of Corporate Auditors and Corporate Auditors ····························The Board of Corporate Auditors comprises all the Corporate Auditors, and, as necessary, the Corporate Auditors andthe Board of Corporate Auditors may express their opinions to Directors or the Board of Directors.
In addition, following the audit policies established by the Board of Corporate Auditors, Corporate Auditors may attend
meetings of the Board of Directors and the Executive Management Committee as well as other important meetings, monitor
the conduct of duties by the Directors and Executive Officers, among others, and, as necessary, express their opinions
and make various kinds of suggestions.
In addition to periodically exchanging opinions with the internal audit division (Internal Audit Department), Corporate
Auditors transmit advice and other points to the internal audit division, as well as exchanging information as needed.
The Corporate Auditors are responsible for reviewing important documents, including draft proposals; conducting various
kinds of hearings and fact-finding activities; on-site research; and other activities to gather information for their day- to-day
auditing activities. In addition, the Corporate Auditors hold periodic meetings with the Accounting Auditor, receive reportson the status of auditing activities and the results of audits, and exchange opinions. The Corporate Auditors also work topreserve the independence of the Accounting Auditor and monitor auditing activities to ensure their proper conduct.
The status of auditing activities and the results of audits are submitted to the Representative Director as an Audit Report.
In periodic meetings with the Representative Director, Corporate Auditors confirm the management policies andexchange opinions on the issues, etc. to be dealt with by the Company.

Board of Corporate Auditors and Nomination of Candidates for Corporate Auditors ·················We believe it is desirable that the Board of Corporate Auditors be composed of Corporate Auditors with experience andknowledge, etc. in operations related to our Company’s business, finance and accounting, risk management and legal
affairs, and auditing, in order to conduct audits on the execution of duties by Directors in an appropriate, fair and efficientmanner.
The Board of Corporate Auditors reviews and deliberates on proposals for the election of Corporate Auditors, which are
to be submitted by Directors to the General Meeting of Shareholders, from such viewpoint in addition to the qualification
requirements under the Companies Act.

4

Officers ··························································································································

Chairman

Hiroki Tanaka

Managing Executive
Officer

Yuji Takei

President & Representative
Director

Yoshikazu Tanaka

Managing Executive
Officer

Takahiro Ishi

Deputy President &Representative Director

Koji Arita

Managing Executive
Officer

Kenji Yoshikawa

Director & Senior Managing
Executive Officer

Hiroshi Takahashi

Managing Executive
Officer

Yasuhiro Ueda

Director & Senior Managing
Executive Officer

Hiroyuki Obata

Managing Executive
Officer

Tsukasa Kotaka

Director & Senior Managing
Executive Officer

Michihiro Masuda

Managing Executive
Officer

Satoshi Sato

Director & Senior Managing
Executive Officer

Ryuichi Yamamoto

Executive Officer

Taku Murakawa

Director (Part-time)

Munetaka Saito

Executive Officer

Masato Maruyama

Director (Part-time)

Junichi Maeda

Executive Officer

Yoshifumi
Nishikido

Corporate Auditor

Toshio Yamasaki

Executive Officer

Ryoichi Ikeda

Corporate Auditor

Hiroshi Hirosaka

Executive Officer

Hiroshi Shiotsu

Corporate Auditor

Makoto Saito

Corporate Auditor

Takeshi Watanabe

Corporate Auditor (Part-time)

Shigenori Ikemura

Corporate Auditor (Part-time)

Tadaaki Matsuura

5

Skills Matrix for the Members of the Board of Directors ························································
・ Our Company’s Board of Directors consists of six Executive Directors and three Independent Directors. The six
Executive Directors have abundant practical business experience at respective financial institutions as follows.
Further, they possess the knowledge, experience, capabilities, and expertise necessary to conduct our Company’s
asset administration business.
・ The three Independent Directors have specialized knowledge of financial institutions and systems, including thosegained at the Bank of Japan, Japan Securities Depository Center, and TOSHO SYSTEM SERVICE, and provide
accurate advice and support from a perspective independent from six Executive Directors to fulfill its supervisory
function over the Board of Directors.
Expertise
Asset
Bank management administration
business

Name

Major positions held

Current position in
our Company(excluding those at our Company and its
predecessor financial groups)

Hiroki
Tanaka(Independent Director)
・ Executive Director, Bank of Japan
Chairman
Chairman of the Board ・ Special Advisor, IBM Japanof Directors

Yoshikazu
TanakaTrust Holdings
President &Representative Director ・ Director and Senior Managing Executive Officer,

・

3 years or moreexperience as an
officer (senior
managing director
or above) of a listedbank, etc.

3 years ormore ofbusiness
experience

Bankingbusiness

Life insurance
business

3 years or moreof businessexperience incommercial
banking

3 years ormore ofbusiness
experience

Securities
markets

Financial/settle
ment systems

IT

3 years or more
3 years or more 3 years or more experience incharge of IT
of work
experience inexperienceplanning
or working in an
IT company

















Senior Managing Executive Officer, Sumitomo Mitsui

Sumitomo Mitsui Trust Bank

Koji Arita

Deputy President & ・ Managing Executive Officer, Mizuho Financial Group
Representative Director ・ Managing Executive Officer, Mizuho Bank

HiroshiTakahashi

Director & Senior
Managing Executive
Officer

Hiroyuki
Obata

Director & Senior
Managing Executive
Officer

Michihiro
MasudaDirector & Senior
Managing Executive
Officer

Ryuichi
Yamamoto

Director & Senior
Managing Executive
Officer・Managing Executive Officer, Sumitomo Mitsui Trust
Bank





・

Abundant practical business experience at Mizuho
Financial Group, Mizuho Trust & Banking, etc.





・

Managing Executive Officer, Resona Bank





・

Executive Officer and Corporate Auditor, The Dai-ichi
Life Insurance
Director, Japan Excellent Asset Management

・・

Munetaka
Saito(Independent Director)
・
Director

Junichi
Maeda(Independent Director) ・ Nagoya Branch Manager, Bank of Japan, etc.
・ Representative Director and Senior Managing
Director・

Director and Senior Executive Officer, Japan
Securities Depository Center
Managing Director, JASDEC DVP Clearing
President and Representative Director, TOSHOSYSTEM SERVICE













Director, Hokkoku Bank

Skills Matrix for the Members of the Board of Corporate Auditors ··········································
・ The six Corporate Auditors are all external Corporate Auditors and have the experience and knowledge, etc.
necessary to audit the execution of duties by Directors as follows.
Experience and knowledge, etc.
Name

Current position in
our Company

ToshioYamasaki

Corporate Auditor(External Corporate
Auditor)Hiroshi
Hirosaka

Corporate Auditor(External Corporate
Auditor)

Makoto
Saito

Corporate Auditor(External Corporate
Auditor)TakeshiWatanabe

Corporate Auditor(External Corporate
Auditor)

Shigenori
IkemuraTadaakiMatsuura

6

Corporate Auditor(Part-time)(External Corporate
Auditor)Corporate Auditor(Part-time)(External Corporate
Auditor)

Major positions held
(excluding those at our Company and its
predecessor financial groups)
・ Managing Executive Officer, Sumitomo Mitsui Trust
Bank・ President and Representative Director, Sumitomo
Mitsui Trust General Service
・ Full-time Audit & Supervisory Board Member,
Development Bank of Japan・ Director and Managing Executive Officer, Asahi Real
Estate Management
・ Statutory Auditor (standing), Asahi Mutual Life
Insurance Company
・ General Manager, Trust Fund Planning Dept., Mizuho
Trust & Banking
・ General Manager, Operations Planning Dept.,
Mizuho Trust & Banking
・ General Manager, Office of Audit Committee, Resona
Holdings
・ Abundant practical business experience at Resona
Holdings and Resona Bank

Banking/Trust Life insurance
businessbusiness

Securities
business









・ General Manager, Insurance Loan Dept., Japan Post
Insurance
・ Director, JP Investment



Risk management/
Legal

Audit





















・ Executive Officer, Sumitomo Mitsui Trust Bank・ Executive Officer & Executive Officer (Shikkoyakuin),
Sumitomo Mitsui Trust Holdings

Finance/
Accounting













Strengthening Initiatives for SDGs
Custody Bank of Japan, Ltd. (hereinafter “CBJ”) considers the achievement of the Sustainable Development Goals(SDGs) to be an important management issue, and is strengthening its efforts for SDGs in order to contribute to theimprovement of corporate value and the realization of a sustainable society in line with its corporate philosophy.
On April 1, 2022, the SDGs Subcommittee of the Corporate Culture Creation Working Group, which played a central
role in the formulation of materiality described below, was dissolved to form a new SDGs Promotion Committee under theleadership of Koji Arita, Deputy President & Representative Director. We will strongly promote efforts toward the SDGs,
led by this Committee going forward.

1. CBJ’s Corporate Philosophy and SDGs
CBJ’s corporate philosophy of “As Japan’s No. 1 bank specializing in asset administration, we shall contribute to thesound development of the economy and society by playing a role in the development of asset management businesses
and the asset formation of the people of Japan,” shares a philosophy and way of thinking with SDGs.
As a financial infrastructure, our Company recognizes that strengthening its efforts toward the SDGs is a social
responsibility, and as a leading company specializing in asset administration, it will work aggressively to achieve the SDGs.

2. Formulation of Materiality and Main Initiatives
Under a framework that combines our commitment to society, customers, and employees as set forth in the CBJ’s Vision
with the environment which is a prerequisite for corporate activities, our Company has formulated the following ninematerial issues as priority issues.
The below are examples of initiatives related to each material issue, and we will work hard to promote these SDGs
initiatives in the future.

Framework

Materiality

1. Response to social
responsibility as afinancial
infrastructure

CBJ’s Vision[Society]
We respond to the trustof society as a financial
infrastructure byproviding high-quality
and reliable services

2. Contribution to thedevelopment ofasset managementbusiness

3. Contribution toeconomicdevelopment and aprosperous
national society

Initiatives

Related SDGs

• Development of robust IT infrastructure thatpays due consideration to the environment
and workstyles• Enhancement of management system forbusiness continuity in accordance withdisaster scenarios• Expanded donation of shareholder benefits
to social welfare corporations• Expanded collaboration with othercompanies in the same industry• Activities to promote paperless practices incooperation with customers• Accurate response to institutional changes,etc.

• Expanded provision of information tobeneficiaries through webinars, etc.
• Efforts to expand investment targets forbeneficiaries• Accurate execution of voting affairs

7

Framework[Society]
We respond to thetrust of society as afinancial
infrastructure byproviding highquality and reliable
services

CBJ’s Vision[Customers]
We aim to become
the best partner forour customers bymeeting theirdiverse needs andmanaging thechanging
environment[Employees]
We shall always be
a company thattakes pride in being
an assetadministration
professional inwhich employees
work to their fullpotential[Environment]
We will make every effort
to pay consideration to theenvironment in our
corporate activities, suchas energy conservation,
resource conservation, andresource recycling

8

Materiality

Initiatives

4. Enhancement of
the governancesystem• Supervision by external Directors• Disclosure of skills matrix for the membersof the Board of Directors• Accurate response to revisions to laws andregulations• Enhancement of risk management system• Enhancement of AML/CFT risk management
system• Enhanced system security• Constant efforts to revitalize the organization
by utilizing town meetings, engagement
surveys, and executive officer opinion
boxes, etc.

5. Provision of highquality, highly
efficient services
based on acustomer-first
approach• Initiatives for improving processing quality• Increased efficiency through promotion of
CBJ Kaizen activities such as improvementof processing flows and RPA*
*RPA is an abbreviation for Robotic Process
Automation. It stands for automating andimproving the efficiency of routine
processing work through robotic technology
of software.

6. Response todiverse customer
needs• Response to diverse outsourcing needs
related to securities management• Expansion of products and services handled• Further strengthening of communication withcustomers using surveys

7. Development ofprofessional humanresources• Unique treatment and job category systems• Enhancement of training menus to improveexpertise(Harumi Custody Academy video, etc.)• Enhancement of career support such as job
postings• Increased value of human resources throughreskilling

8. Promotion ofdiversity andinclusion• Establishment of the D&I Promotion Office• Establishment of a workplace environment
conducive to women’s active participation in
the workplace• Support for people balancing work withchildcare or nursing care
• Initiatives for diverse workstyles• Promotion of employment of and enhanced
communication with persons with disabilities

9. Implementation of
corporate activities
with dueconsideration for
the environment• Promotion of paperless practices throughweb-based meetings, digitization, andreduction of multifunction printers• Energy-saving through the use of cloudcomputing, LEDs and others• Reduced use of office space throughpromotion of ‘free address’ seating andefficient use of furniture and fixtures

Related SDGs

3. Town Meetings Held
A total of 12 town meetings were held over the period from January to February 2022, in which both the officers andemployees participated, in order for the employees to understand SDGs and to appreciate that the CBJ’s Corporate
Philosophy and other principles as well as their daily work are closely linked to SDGs.
There was two-way communication, as the officers presented the management philosophy to the employees while theemployees made comments on matters that CBJ should work on in the future. Also in light of the opinions expressed at
the town meetings, we will work on initiatives that lead to the promotion of SDGs going forward.

4. Diversity & Inclusion (D&I) initiatives
Our Company is stepping up its D&I efforts, including promoting women’s advancement in the workplace, giving support
for balancing work and childcare, promoting elderly persons’ active participation, and collaborating with people withdisabilities. As a result, in November 2021, we obtained the “Kurumin” and “Platinum Kurumin” certifications as an excellent
company for supporting child-rearing from the Minister of Health, Labour and Welfare. In January 2022, we also received
the “Eruboshi (Level 2)” certification as a company committed to promoting the advancement of women.
In April 2022, we established the D&I Promotion Office within the Human Resources & Corporate Administration
Department. We will focus on developing a corporate culture and workplace environment in which each employee respects
diverse values and can work more actively than ever before.

[Kurumin certification]
It is a system through which the
Ministry of Health, Labour andWelfare certifies a company thatmeets 10 requirements as one
supporting child-rearing[Platinum Kurumin
certification]
It is a system through which the
Ministry of Health, Labour andWelfare certifies a company thatmeets criteria higher than thosefor the Kurumin certification as
an excellent company[Eruboshi certification]
It is a system through which the
Ministry of Health, Labour andWelfare certifies an excellent
company that promotes theadvancement of women

9

Action Policy on Fiduciary Duty
I.

PrefaceIn order to fulfill our fiduciary duty under the Vision to “Become the best partner for our customers by meeting theirdiverse needs and managing the changing environment,” Custody Bank of Japan has formulated and announced the
Fiduciary Duty Management Policy and Asset Administration Action Policy to practice measures that place our customers
first in fulfilling the Fiduciary Duty of overall asset administration business.
II. Fiduciary Duty Management Policy
Our Company shall establish and comply with the Fiduciary Duty Management Policy in carrying out asset administration
businesses that meet the diverse needs of our customers.
1. Management System
Concrete action plans shall be formulated and announced for the fulfillment of fiduciary duty, and the compliancedivision periodically reports on the status of compliance to the Board of Directors and other organizations.
2. Performance Evaluation
An appropriate performance evaluation system shall be developed to evaluate initiatives that truly meet the needs
and realize the benefits of customers.
3. Management of Conflict of Interest
Conflict of interest shall be appropriately managed by identifying and classifying transactions that may cause a conflictof interest and determining specific management methods. We will also enhance the management on conflict of interestby providing easy-to-understand information on the examples of conflict of interest.
4. Penetration of Corporate Culture
We will establish a corporate culture in which all officers and employees, among others, share awareness of andpractice compliance with the fiduciary duty by establishing training and other appropriate motivation frameworks.
III. Asset Administration Action Policy
Our Company shall establish and implement the following asset administration policies.
1. Strengthening Asset Administration Service Framework
We shall appropriately allocate resources such as human resources, administrative infrastructures, and systems inorder to improve reliability and speed of administrative work as a basis of asset administration services.
We shall strive to develop human resources equipped with high-level expertise in legislation and taxation related tosecurities and cash settlement necessary for asset administration services.
2. Sophistication of Administration, Systems, etc. as Financial Infrastructure
To meet the increasingly diverse and sophisticated asset management needs of our clients on a global scale, we shallpromote advancement of administration and systems.
3. Initiatives on Improvement of Service Quality and Development of New Services
While appropriately managing trust assets for assurance of clients, we shall constantly strive to develop new services
in a wide range of fields in the asset administration, with the aim of providing optimal solutions to meet clients’increasingly diverse and sophisticated needs.
We shall provide appropriate information on asset administration fees for services provided to clients.
4. Enhancement of Information Service to Support Customers’ Investment Activities
In order to contribute to the sophistication of our customers’ investment activities, we shall strive to provide high valueadded information (legislation, taxation, and market information) in a timely manner, based on various reports as wellas information from markets, etc.
IV. Action Plan
Please visit our Company website.
(https://www.custody.jp/corporate/ﬁduciary/index.html)
10

Review of Business Performance(1) Income Summary
As for profit and loss for the fiscal year under review, ordinary income was ¥57,665 million. Key components
included ¥38,012 million of fiduciary fees, and ¥22,419 million of fees and commissions.
Ordinary expenses, on the other hand, amounted to ¥55,734 million. The principal components of ordinary
expenses were ¥52,909 million in general and administrative expenses, and ¥2,814 million in fees andcommissions expenses.
As a result, ordinary profit was ¥1,931 million, with net income of ¥576 million.

(2) Assets, Liabilities, Etc.
Total assets at the end of the fiscal year under review were ¥17,248,209 million, a drop of ¥29,626 million
during the year due to a decrease in cash and due from banks and loans. The principal components were
¥16,748,115 million in cash and due from banks, ¥149,400 million in call loans and ¥65,504 million in securities.
On the other hand, liabilities amounted to ¥17,128,401 million, down ¥30,052 million during the year due toa decrease in deposits, etc. The principal components were ¥5,766,452 million in deposits, and ¥11,186,487
million in borrowed money from trust account.
Moreover, net assets were ¥119,808 million.
The capital adequacy ratio (Japanese standard) was 29.42%.

(3) Balance of Assets under Custody
At the end of the fiscal year under review, the balance of fiduciary assets and assets under custody basedon standing proxy contracts was ¥667,584,500 million, down ¥52,594,700 million during the year.

(4) Status of Trust Consolidation
We had been promoting a project to transfer investment trust assets, and shifted to business operations
under a new structure on May 2, 2022. We will continue to explore various possibilities in terms of further
integration of processing work and systems for the Trust Business.

11

Introduction of Our Company’s Business

Our Company’s businesses are broadly divided into the following categories, with specialized departments inplace providing a wide range of services, to respond quickly and accurately to the increasingly sophisticated anddiverse needs of clients.

● Investment trust fund administration
We manage the overall administration related to asset administration entrusted by investment trust managementcompanies, and the main operations thereof are as follows.
1. Calculation of net asset value of investment trust
2. Report on the details of the fund to investment trust management companies
3. Procedures for acceptance, cancellation and redemption of funds
4. Closing of accounts
Each year, we conduct a questionnaire survey of investment trust management companies, to reflect clients’opinions in improving our services.

● Administration of funds such as pension assets
We manage the overall administration related to asset management entrusted by clients, and the main operations
thereof are as follows.
1. Administration of B/S/P/L of funds (per contract)
2. Response to and report on inquiries from clients about the details of the fund, such as daily cash flows
3. Response to regulatory changes and administration of fiduciary fees
4. Administration of funds (principal)
5. Provision of various services to investment advisory and other asset management companies
6. Preparation of the balance report
7. Preparation of financial statements
8. Preparation of monthly reports and disclosure materials
For disclosure materials, we provide online services for some report forms.

● Domestic securities administration
For domestic securities administration, we manage the overall administration related to domestic securities, andthe main operations thereof are as follows.
1. Administration of execution related to domestic securities and assets, etc.
2. Administration related to dividends, principal and other rights concerning domestic securities and assets, etc.
3. Administration of execution, margin transaction execution, margins and collateral related to derivatives suchas futures and options
4. Administration related to lending, such as stock lending, bond lending, and repo transactions
We respond to instructions from fund managers via various kinds of electronic media (settlement matchingsystem of Japan Securities Depository Center, Inc., SWIFT, smart bridge, and XNET).

● Foreign securities management
For foreign securities management, we manage the processing of overall administration related to foreign
securities, and the main operations thereof are as follows.
1. Transaction of foreign securities
2. Administration of the preservation of ownership rights over foreign securities
3. Reconciliation of securities and cash balances
We respond to the special features and variability of individual markets by utilizing information provided by global
custodians, etc., and also regularly provide information to customers.
12

● Domestic and overseas custody services
We manage the overall administration related to securities management based on the delegation from customers,
and the main operations thereof are as follows.
1. Custody and agency for trade settlement of securities
2. Proxy receipt of interest and dividends
3. Administration service for shareholders benefit
4. Preparation of reports on transactions, balance, etc.
In Japan, we provide services through standing proxies and account management agencies, while overseas, we
provide services through the overseas offices of affiliated companies.

● Life insurance company asset custody service
We manage the overall administration of securities for life insurance companies, including securities accounting,and the main operations thereof are as follows.
1. Settlement and administration of various securities (including derivative transactions) and incidental
transactions in Japan and overseas
2. Accounting such as asset valuation, preparation of accounting entry data and preparation of closing data
3. Preparation of various management and reporting materials
4. Administration service for preferential benefits of General Meeting of Shareholders
5. Automatic conversion of foreign exchange into yen
6. Securities lending services
We provide comprehensive outsourcing services for management and administrative functions, including
securities and cash settlement, and securities accounting.

● Middle- and back-office outsourcing services for asset management companies
We are entrusted with the administration related to overall post-trade operations of asset managementcompanies, and the main operations thereof are as follows.
1. Middle office operations (transaction processing, matching and management, etc.)
2. Back office operations (accounting, calculation of net asset value, closing of accounts, etc.)
3. Disclosure operations (preparation of prospectus and investment reports, etc.)
We provide flexible services, covering overall post-trade operations and responding to outsourcing needs for theunits of various investment trust operations.

● Collateral management services for over-the-counter derivative transactions
We are entrusted with a series of collateral management services related to regulations on over-the-counter
derivative transactions, and the main operations thereof are as follows.
1. Aggregation of unrealized gain or loss by transaction
2. Calculation of the collateral amount and negotiations (disputes) for adjustment of the collateral amount
3. Settlement of collateral securities and funds
We shall actively engage in the development and provision of value-added services in order to mitigate
administrative burdens and reduce system development costs for our customers.

13

Introduction of Our Company’s Business● Other operations
For other operations, we are implementing the following:
1. Securities lending
2. Administration related to entrusted assets of securities trusts under management, securities administration
trusts, and account management institution services, etc.
3. Administration related to the undertaking of financial institution services
Based on one of the nation’s largest asset sizes and accumulated know-how and experience, we shall provide
fine-tuned services to meet customer needs.

● Overview of business operations
Our Company’s services areindicated in the box.
Asset managementcompanies

Orderplacement

Order placement

Securities companies

Custodians
Settlement

Execution/
instruction

Stock exchanges

Japan Securities
Depository Center, etc.

Various companies
providing fair value

Fair value/rights/
issuance terms data

Settlement

Domestic securities
administration

Fund accounting(Investment trusts,
pension assets, etc.)

Services of Custody Bank of Japan

Insurance Accounting
Domestic and overseas
custody services

Collateral management forover-the-counter
derivatives transactions
Securities lending, etc.

SWIFT etc.

Settlement

Foreign securities
administration

Middle- and back-officeoutsourcing services
for asset managementcompanies

Various information
services

Various reports
Contract

Funds
Data provision

Reports

Customers

14

Execution/
instruction

Initiatives for Improving Processing Quality[Initiatives for Improving Operational Quality]●

Activities to improve operational quality and efficiency

Our Company has established Operations Planning Department to oversee the overall operations, and is working to
improve the quality and efficiency of its operations.
The Operations Planning Department handles changes to institutions, taxation, and accounting, etc. and is
responsible for the overall processes for offering products and services to customers, investment trust managementcompanies, and investment advisory companies. The department is also in charge of planning and the promotion of
measures pertaining to improvements in processes, standardization, and efficiency enhancement. Also, as noted in thenext section under Processing Risk Management Activities, this department is preparing the way for securing theeffectiveness of processing risk management activities.
●

Processing Risk Management Activities

With the awareness that minimizing processing risk is one of the most-important issues for a company specializing inasset administration, the Company has prepared its Processing Risk Management Rules, which contain basic items for
conducting proper and smooth processing operations and for the management of processing risk. Based on these rules,
the Company engages in control activities to take preventive measures (ex ante) and deal with risks that have emerged(ex post).
<<Preventive measures>>
To prevent accidents and other incidents, the Company has established processing procedures manuals for all its
processing operations, forbidden non-standard processing, and been thoroughly conducting mutual checking as
standard procedure.
<<Dealing with risks that have emerged>>
In the event of an accident or other incident, the Company endeavors to accurately assess the situation, report itquickly, and take action with the top priority placed on the protection of managed assets. The Company also analyzes
the factors and issues that caused the incident, formulates measures to prevent reoccurrence and confirms theeffectiveness of these measures.

Improving operational
quality

Improving operational
efficiency“Stable and high quality” operations

Department in overall charge of operations =“Operations Planning Dept.”

Operations Planning Department

Respective Departments

・ Taking overall charge of operations (including thoserelated to institutions, taxation, accounting, andproviding products and services to customers,
investment trust management companies andinvestment advisory companies)
・ Promotion of processing improvements,
standardization and productivity enhancement
・ Taking preventive (ex-ante) measures: preparation
and updating of the processing procedures manuals
・ Taking (ex-post) measures: management ofprocessing errors

・ Taking charge of improvements,
etc., with operating units
・ Promotion/implementation of
measures adopted by the
Operations Planning Department

15

Initiatives for Institutional Reforms, Etc.

[Initiatives for Regulatory Reforms, Etc.]
The securities settlement system plays an important role in Japan’s securities transactions as a core elementin the institutional base. Our Company, as a leading company in the asset administration business, is preparing
actively to respond to the “Securities Settlement System” and “Domestic Securities Regulatory Reforms” aimed
at reducing settlement risk. In addition, other than the Securities Settlement System, our Company positions
responding appropriately to the International Regulations for derivative transactions, and the Extraterritorial
Application of Individual Regulations in the United States and Europe, among others, as one of the important
issues and has been steadily doing so.
We will continue to take appropriate responses to provide customers with high-quality services.
<Major events since FY2021>
Category

Securities
Settlement
System Reforms

International
MarketRegulations, etc.

Field

Content and CBJ’s Initiatives

Schedule

During FY2024

Tokyo Stock
Exchange

Extension of thesession time

It considers extending the session time of the
cash market by 30 minutes by the latter half of
FY2024. At our Company, the impact is expected
to be felt mainly in the operation businessregarding to security, as well as in the stock
lending and futures operations. We will continue
to work with the Tokyo Stock Exchange, Trust
Companies Association of Japan, and otherorganizations to respond.

Interest rate
indicator

Suspension of LIBOR
publication

The interest rate indicator globally referenced in
products and contracts has been changed from
LIBOR to risk-free rates.

[Completed]
December
2021

Foreign currency
exchangetransaction

Shift to CLS
settlement

Preparations are underway at relevantorganizations for enabling PVP settlements
through CLS banks for foreign currency
exchange transactions by investment funds.
Trust funds for which our Company serves astrustee are also gradually making the shift.

Shift asappropriate

Global securities
transactions

Collateral now
required fortransactions such as
TBA transactions

According to the regulations of FINRA in theUSA, American companies are required to collect
collateral when carrying out transactions such as
TBA transactions. Our Company is also
preparing to accommodate it.

October 2022

Review of theoperation oftransaction reportingIn April 2024, we will make the following threechanges regarding our weekly OTC derivative
reporting to the Financial Services Agency.
1) Uniform reporting format based on global
standards with an increased number ofreporting items
2) Change to indirect reporting through the Trade
Repository (TR)3) Change in reporting frequency to daily
CBJ is also taking appropriate actions to
respond.

April 2024

Reporting on
OTC derivativetransactions

16

Upcoming Events

Risk management system[Risk management system]●

Risk management policy

In order to fulfill its public mission as a bank specializing in asset administration, the Company has been developing
a risk management system as one of its most important management policies to appropriately manage and control
risks and ensure the soundness of its management. Furthermore, we are creating a corporate culture that emphasizes
risk management, and based on the concept of a three-line defense, we have built a risk management framework forbusiness execution to ensure the effectiveness and appropriateness of our risk management system.
●

Fostering a risk culture

A sound risk culture is nurtured by all officers and employees involved in our Company’s business, to have a deep
insight into risk and a strong sense of ethics regarding the execution of their duties, which supports the framework of
the risk management system and leads to the maintenance of customer trust and the sustainable improvement ofcorporate value.
Through the formulation and dissemination of action guidelines on risk in line with our operations and the applicationof the guidelines by individual employees in their daily work, our Company strives to foster a sound risk culture
throughout the Company by instilling a risk mindset as employees of a bank specializing in asset administration.
●

Risk governance

Our Company ensures the effectiveness and appropriateness of our risk management system through a three-line
defense: autonomous control by each business unit (First line), risk management by the risk management unit (Secondline), and internal audits by the independent internal audit unit (Third line).
[Frist line] Each business unit: Autonomous control function
・ While carrying out daily operations in accordance with regulations and rules, each business unit has primary responsibility as theowner of risks associated with business execution, and autonomously conducts control activities such as identifying, assessing, andcontrolling risks.
[Second line] Risk management unit: Risk management function
・ The Risk Management Department and the risk management units monitor the autonomous control activities carried out by the firstline, and establish a risk management process by identifying and assessing the risks for our Company.
[Third line] Internal Audit Department: Internal audit function
・ Independent from individual business execution divisions, it verifies their activities, among others.

17

Risk management system●

Risk Management System

Recognizing that risk management is one of the most important management issues as a bank specializing
in asset administration, our Company is working to implement appropriate risk management across the entire
company and to improve our risk management system by formulating a basic framework for risk management,with the Board of Directors defining the various risks to be managed, creating the organizations and structures
for risk management, and in addition, establishing the Risk Management Deliberation Committee as a crossorganizational body chaired by the officer in charge of risk management.
Specifically, as shown in the table and figure below, we have classified risks incurred in the course of executing
business into categories such as “Operational risk,” “Liquidity risk,” “Credit risk” and “Market risk” and establisheda risk management unit for each category to manage risks according to their characteristics, while establishing
the Risk Management Department as a department supervising unified management to manage risks in an
integrated manner. As part of the integrated risk management, we gain an understanding of the aggregate levelof risk in each category through qualitative and quantitative assessments, and manage the adequacy of capitalby comparing such levels with the strength of our business.
In light of the risk profile specific to asset administration operations, our Company recognizes operational risk
and liquidity risk as major risks. Accordingly, we engage in a variety of risk management activities, with a basic
policy of preventing operational risk and minimizing its impact when it materializes, as well as a basic policy of
not taking on liquidity risk to the extent possible while developing a system for dealing with funding crises.
<Content of Risk Category>
Risk to be managed and its content

Management method

Operational
risk

Risk of incurring losses due to reasons such as defects
in the operational process, errors by officers andemployees, system malfunction, or external events
such as rumors.

・ Broad management by classification into individual risks
concerning administration, information security, systems,
legal affairs and compliance, human resources, tangible
assets, and reputation.
・ Developing a risk assessment system through Control
Self-assessment (CSA)

Liquidity risk

Risk of incurring losses due to reasons such as an
inability to secure necessary funds, funding problems,or the need to procure high interest rate funds.

・ Funding mismatch limit management and stress testing・ Establishing a crisis management system for a funding
crisisCredit risk

Risk of incurring losses due to a decline in or complete
loss of asset value as a result of a deterioration in thefinancial condition of counterparties

・ Credit management based on the credit rating system
・ Setting credit limits and other limits for each counterparty

Market risk

Risk of incurring losses due to fluctuations in asset
value or income as a result of changes in the prices ofmarket transactions

・ Identifying the degree of risk using interest rate sensitivity
・ Setting limits on the degree of risk and the amount of loss
limits as well as stress testing<Risk Management Structure>
Board of Directors
President - Executive Management Committee
Officer in charge of risk management - Risk Management Deliberation Committee (*)(*) An organization that
deliberates and coordinatesrisk management across theentire company.

Operational risk

Market risk

Credit risk

Liquidity risk

Risk Management
Department

Audit

Internal Audit
Department

Human Resources& Corporate
Administration
Department

Reputational risk

Tangible asset
risk

System Risk ComplianceManagement Department
Department

Personnel risk

Legal &
compliance risk

System risk

Information
security risk

Processing risk

Each business unit
Monitoring

Operations
Planning
Department

Second line
First line

18

Third line
Audit

Compliance Systems[Compliance Systems]
As Japan’s No. 1 bank specializing in asset administration, we shall contribute to the sound development of economy
and society by playing a role in the development of asset administration business and the asset formation of the nation.
Under this Corporate Philosophy and for its realization, we shall act with integrity and impartiality in compliance withlaws, rules, and social norms as a pillar of our Action Guidelines. For this reason, our Company positions legal andother kinds of compliance as one of our top priority management issues, in other words, compliance with not only laws
and regulations, but also social norms in a broad context. Our Company, by developing compliance management
system in overall operation, strives to ensure sound and appropriate management based on self-discipline, and ensure
our customers and society have full confidence in us.
●

CBJ’s Compliance Structure

The Board of Directors makes decisions on basic compliance matters and oversees the implementation. The
President also oversees compliance at our Company, and the Executive Management Committee deliberates andreports on compliance matters.
Our Company has designated the Compliance Department as a department supervising compliance matters. The
department develops internal regulations required for the compliance management system, implements measures andguidance, responds to issues, and improves training and education structures to manage overall compliance in our
Company. The Compliance Department regularly reports progress on compliance matters to the Board of Directors,
etc. and promptly reports when a serious violation of laws and regulations or an event with a grave impact onmanagement occurs.
In each department of our Company, the General Manager, who is responsible for compliance in each department,
and the Compliance Manager are positioned to secure the effectiveness of compliance in each department and carryout concrete measures in cooperation with the Compliance Department.

Board of Directors
Executive Management
Committee
Compliance Department

Respective Departments

General Manager
Person responsible for compliance in eachdepartment●

Compliance Manager
Implementing measures for compliancein cooperation with the ComplianceDepartment

Making All Personnel Aware of Compliance

In principle every year, the Compliance Department formulates a compliance program, and it is a specific action planfor the achievement of compliance. This compliance program is disseminated across the entire organization, after
obtaining approval of the Board of Directors.
Our Company has also established the Compliance Manual as a practical guide for officers and employees to ensurecompliance. Formulation and important revision of the Compliance Manual are disseminated across the organization
after approval of the Board of Directors is obtained.
●

Compliance Hotline System

Internal and external reporting desks (the Compliance Hotline) are established for officers and employees, etc. of ourCompany to report acts of legal violations, or suspected violations within our Company. In order to protect
whistleblowers, this system ensures thorough information management and privacy protection, and strictly prohibits
disadvantageous treatment of whistleblowers. When a report is received, the Compliance Department reports to theofficer (Director) in charge of the Compliance Department and Corporate Auditors and takes appropriate action.
19

Internal Audits●

Basic Action Policy

Our Company’s internal audit is a process, independent from the business lines, of verifying theappropriateness and effectiveness of governance process, risk management and controls for the achievementof management goals, objectively and holistically assessing the results, providing findings and recommendations
to correct issues, and following up on the status of improvements.
Our Company has established the Basic Policy on Internal Audit to ensure sound business, and carries out
the following initiatives to verify and assess the appropriateness and effectiveness of the internal management
system.
1) Establishment of the internal audit division that is independent from the business execution divisions andhas a sufficient check-and-balance function2) Based on the formulation of an internal audit plan, the internal audit division audits each business execution
division and provides findings and recommendations for improvements.
3) Results of internal audits and the progress of internal audit plans are reported to the Internal Audit
Committee and the Board of Directors in accordance with internal audit rules.
●

Organizational structure

The Internal Audit Department has been established as an internal audit division independent of eachbusiness execution division, covering all units and operations in internal audits.
●

Functions and roles

In line with the Basic Policy on Internal Audit, the Internal Audit Department formulates an internal audit plan
focused on material risk items of our Company. The plan is approved by the Board of Directors.
Results of internal audits are reported to the President and Corporate Auditors without delay, and are
periodically reported to the Internal Audit Committee and the Board of Directors.
Depending on the purpose of internal audits, general audits are conducted to audit matters related to theoperations under the jurisdiction of the units concerned, and theme audits to audit specific themes.

<Internal Audit Structure>
Corporate Auditor

Board of Directors
Placing plans on
the agenda,
reporting on
results

Internal Audit
Committee(Chairperson: President)

Business Execution
Division

Reports

Internal Audits

Internal Audit
Department

Designated Dispute Resolution Organizations
Our Company has concluded contracts with the following designated dispute resolution organizations.
Name of designated dispute
resolution organization

Japanese Bankers Association

Trust Companies Association of Japan

Contact and telephone
numberConsultation Desk, Japanese Bankers
Association
0570-017109 or 03-5252-3772

Trust Consultation Desk
0120-817335 or 03-6206-3988* The Japanese Bankers Association is a designated dispute resolution organization under the Banking Act and the Norinchukin Bank Act.
* The Trust Companies Association of Japan is a designated dispute resolution organization under the Trust Business Act and the Act on
Engagement in Trust Business Activities by Financial Institutions.

20

As a Public Institution (Disaster Prevention Measures)

Custody Bank of Japan has established a system for business continuity in the event of a disaster based on its
recognition that it is a public institution in asset administration services.

● Disaster Countermeasures
In the event of a disaster or system failure with a significant impact on business operations, we shall strive tominimize the damage through speedy initial response, and secure early and smooth business continuity andrecovery.
A business continuity plan is established by the Business Continuity Management Deliberation Committee chairedby the President in times of normality, and new issues are addressed through regular drills on disaster response,
etc.

Facilities (Installations and Equipment)
Our Head Office is located in the Harumi Island Triton Square complex and is designed to withstand magnitude
7 (Japanese scale) earth tremors, such as the 2011 Great East Japan Earthquake. Further, as a financial institution,
our Company, in line with the standards issued by The Center for Financial Industry Information Systems (FISC),
has installed a dedicated electric power generator to secure a power supply, utilizes telecommunications lines frommultiple carriers to avoid communication breakdowns, and introduced an IC card system to strengthen crimeprevention measures.
In addition, our system centers and backup centers have similarly strong infrastructure, including anti-earthquake
construction, electric power sources, and security facilities.

Backup Systems
CBJ’s offices and system centers have backup facilities in preparation for possible natural disasters or otherdifficulties.
Our Company has established backup offices of the Harumi Head Office as disaster countermeasures in Fuchu
City and Chofu City, and backup centers of system centers in Osaka Prefecture and Saitama Prefecture.
[Normal time]

Office environment

Harumi Head Office

System environment

System centers(Fuchu and Chofu)

21As a Public Institution (Disaster Prevention Measures)[When Harumi Head Office is damaged]
If the Harumi Head Office is affected by a disaster, operations will be continued at backup offices in the cities
of Fuchu and Chofu, together with opening temporary counters (delivery counters for securities companies andother customers).

Office environment

System environment

Backup offices (Fuchu and Chofu)

Temporary counters activated
System centers

When Harumi Head Office
is damaged(Fuchu and Chofu)[When system centers are damaged]
If the system centers (cities of Fuchu and Chofu) are affected by a disaster, the system environment will betransferred and operations continued at the backup centers (Osaka and Saitama prefectures).

Office environment

System environment

Backup centers(Osaka and Saitama prefectures)

Harumi Head Office

22

When system centers(Fuchu and Chofu)

are damaged

As a Public Institution (Disaster Prevention Measures)

Financial Section■ Key Indicators of Management Condition ............................................ 24■ Balance Sheets ....................................................................................... 25■ Statements of Income............................................................................. 26■ Statements of Changes in Net Assets .................................................. 27■ Notes to Accounting Items (FY2021) .................................................... 28■ Confirmation Statement from Management ......................................... 32■ Auditors’ Statement ................................................................................ 32■ Fair Value Information of Securities, etc. ............................................. 33■ Other Asset Situation ............................................................................. 34■ Indicators for Banking Business ........................................................... 35■ Matters Concerning Bank Management................................................ 39■ Indicators for Trust Business ................................................................ 40■ Capital Adequacy Status, etc................................................................. 44■ Disclosure of Compensation, etc. ......................................................... 52■ Consolidated Information ...................................................................... 5323

Key Indicators of Management Condition

Key Indicators of Management Condition(¥ million)

FY201727,436FY201829,467FY201930,756FY202049,297

FY2021
57,665

Ordinary profit

1,199

555

694

1,235

1,931

Net income

480

344

506

680

576

Capital stock

Net assets

51,0001,020,000
shares59,43551,0001,020,000
shares59,07651,0001,020,000
shares59,58251,0002,040,000
shares119,382

51,0002,040,000
shares
119,808

Total assets

13,835,275

11,040,555

9,946,450

17,277,835

17,248,209

Deposits

7,840,589

5,309,477

3,631,072

7,410,882

5,766,452

Loans

184,058

167,951

97,13631,141

1,858

337

334

30,34975,28665,504

Ordinary income

Total number of shares issued

Securities
Dividend payout ratio (*1)
Number of employees (*2)
Non-consolidated capital adequacy
ratio (Japanese standard) (*3)
Fiduciary fees
Trust account loans

40.31%--

19.79%

19.80%

1,052 persons

1,067 persons

1,135 persons

1,969 persons

1,980 persons

31.70%

36.54%

34.12%

34.26%

29.42%

20,577

21,95623,02432,75738,012---

310,640-

109,179,760

116,317,170

123,178,561

217,702,529

153,512,487

-

-

-

-

-

282,074,441

291,898,563

303,754,597

467,599,890

421,659,447

Trust account securities(Excluding trust account, electronically recorded,transferred-rights securities)

Trust account, electronically recorded,transferred-rights securities

Total entrusted assets(*1)

The dividend payout ratio for FY2018 does not include dividends from the business merger carried out in September
2018.

(*2)

The number of employees includes personnel seconded from Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank,
Resona Bank and other companies (590 in FY2020 and 553 in FY2021), and those seconded from Sumitomo Mitsui
Trust Bank, Resona Bank and other companies (204 in FY2017, 189 in FY2018, and 194 in FY2019).

(*3)

The “Non-consolidated capital adequacy ratio (Japanese standard)” is calculated according to the “Standards forbanks to judge their capital adequacy in light of assets they held based on Article 14-2 of the Banking Act” (Financial
Services Agency Notification No. 19 of 2006).

(*4)

On July 27, 2020, our Company merged with JTC Holdings and Trust & Custody Services Bank, changing the tradename from Japan Trustee Services Bank to Custody Bank of Japan. Figures up to FY2019 are those for the premerger period (Japan Trustee Services Bank), and from FY2020 onwards, those for Custody Bank of Japan.
(¥ million)

Former Trust & Custody Services
Bank
Ordinary income
Ordinary profit
Net income
Capital stock
Total number of shares issued
Net assets
Total assets
Deposits
Loans
Securities
Dividend payout ratio (*1)
Number of employees
Non-consolidated capital adequacy
ratio (Japanese standard) (*2)
Fiduciary fees
Trust account loans
Trust account securities(Excluding trust account, electronically recorded,transferred-rights securities)

Trust account, electronically recorded,transferred-rights securities

Total entrusted assets

24

FY2017FY2018FY201923,884857
507
50,0001,000,000
shares61,024
13,657,253
9,875,034
6,209,728
263,932
19.71%
690 persons

25,113740
939
50,0001,000,000
shares59,4796,494,669
2,274,797
709,241
295,307697 persons

25,498328
64
50,0001,000,000
shares59,493
5,972,264
2,407,030
174,817821 persons

22.67%

37.84%

46.01%

11,425-

12,431
1,745,329

13,134
1,556,509

81,754,495

85,096,939

83,110,413

-

-

-

143,366,870

143,717,067

139,836,527(*1)

The dividend payout ratio for FY2018 does not include dividends from the business merger carried out in September
2018.

(*2)

The “Non-consolidated capital adequacy ratio (Japanese standard)” is calculated according to the “Standards forbanks to judge their capital adequacy in light of assets they held based on Article 14-2 of the Banking Act” (Financial
Services Agency Notification No. 19 of 2006).

Financial Data

Balance Sheets(¥ million)

AssetsCash and due from banks
Cash
Due from banks
Call loans
Securities
Government bonds
Local government bonds
Corporate bonds
StocksOther securities
Loans and bills discounted
Loans on deeds
Foreign exchanges
Due from foreign banks (our accounts)
Other assets
Prepaid expenses
Accrued income
Derivatives other than for trading-assets
CCP margin deposits
Other
Tangible fixed assets
Buildings
Lease assets
Other tangible fixed assets
Intangible fixed assets
Software
Other intangible assets
Prepaid pension expenses
Deferred tax assets
Total assets
Liabilities and net assets
Deposits
Current deposits
Ordinary deposits
Other deposits
Call money
Due to trust accounts
Other liabilities
Income taxes payable
Accrued expenses
Derivatives other than for trading-liabilities
Lease obligations
Asset retirement obligations
Suspense receipt
Other
Provision for bonuses
Provision for retirement benefits
Total liabilities
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Total shareholders’ equity
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

FY2020

FY2021(March 31, 2021)(March 31, 2022)

16,763,063
0
16,763,062
129,500
75,28630,00935,0239,744
490
18
31,141
31,141
4,909
4,909
217,401
1,119
13,313
91
157,699
45,177
4,449
2,174
26
2,249
50,69650,65145
353
1,034
17,277,835

16,748,115
0
16,748,114
149,400
65,50430,00331,962
3,028
490
19
1,858
1,858
4,364
4,364
217,796
1,084
12,913
6
155,50348,287
4,284
2,294
44
1,945
55,39055,34544430
1,064
17,248,209

7,410,882
6,387,257
1,004,901
18,72330,0009,654,126
61,932
753
3,918
30
28
721
48,762
7,715
606
905
17,158,453
51,00059,07350,000
9,073
9,263
1,094
8,169
8,169
119,33745
45
119,382
17,277,835

5,766,452
4,866,975
871,746
27,730110,900
11,186,487
62,997
322
3,942
7
48
830
51,171
6,672
620
943
17,128,401
51,00059,07350,000
9,073
9,706
1,094
8,611
8,611
119,77928
28
119,808
17,248,209

25

Financial Data

Statements of Income(¥ million)

Ordinary income

FY2021(from April 1, 2020
to March 31, 2021)(from April 1, 2021
to March 31, 2022)

49,297

57,665

Fiduciary fees

32,75738,012

Interest income△ 4,064△ 2,771

Interest and dividends on securities

25

8Interest on call loans

1110Interest on receivables under resale agreements
Interest on deposits with banks△7-△ 4,095△ 2,792

Other interest income

1

3

Fees and commissions

19,94522,419Fees and commissions on domestic and foreign exchanges
Other fees and commissions
Other ordinary income
Gains on foreign exchange transactions
Other income

479

454

19,46521,964

1

2

1

2

657

1

Gain on sales of stocks and other securities

587

-

Other

69

1

48,062

55,73417

7Interest on deposits00Interest on call money

00Interest on borrowings

0

0

Other interest expenses

16

6

2,735

2,814

Ordinary expenses
Interest expenses

Fees and commissions payments
Fees and commissions on domestic and foreign exchanges
Other fees and commissions
General and administrative expenses
Other expenses
Other
Ordinary profit
Extraordinary income
Other

141

172

2,594

2,641

45,30052,909

9

2

9

2

1,235

1,931

11

-

11

-

258

1,086

Loss on disposal of noncurrent assets

45

617

Impairment loss

213

468

Income before income taxes

988

844

Income taxes—current

521

290

Income taxes—deferred

△ 213

△ 22

Total income taxes

308

267

Net income

680

576

Extraordinary loss

26

FY2020Statements of Changes in Net Assets(¥ million)

FY2020 (from April 1, 2020 to March 31, 2021)
Shareholders’ equity
Capital surplus
Capitalstock

Balance at the beginning of
the period
Changes of items during theperiodLegalcapitalsurplus51,000

Increase by merger

Other
capitalsurplusRetained earnings

Total capitalsurplusLegalretainedearnings

Other retained
earnings
Retainedearnings
brought
forward

1,094

7,489

8,583

680

680

680

-

-

-

50,0009,073

59,073Total
retainedearnings

Total
shareholders’ equity

59,58359,073

Net income
Net changes of items otherthan shareholders’ equity

Total changes of items
during the period
Balance at the end of theperiod-50,0009,073

59,073

-

680

680

59,75351,00050,0009,073

59,073

1,094

8,169

9,263

119,337

Valuation and translation
adjustments
Valuation
Total
difference
valuationonandavailabletranslation
for-saleadjustments
securities
Balance at the beginning of
the period
Changes of items during theperiodIncrease by merger△1△159,58270

70

59,143

△ 23

△ 23

△ 23

47

47

59,80045

45

119,382680

Net income
Net changes of items otherthan shareholders’ equity

Total changes of items
during the period
Balance at the end of theperiodTotal net
assets(¥ million)
FY2021 (from April 1, 2021 to March 31, 2022)
Shareholders’ equity
Capital surplus

Balance at the beginning of
the period
Changes of items during theperiodRetained earnings

Capital
stock

Legal
capitalsurplus

Othercapitalsurplus

Total capitalsurplusLegalretainedearnings

Other retained
earnings
Retainedearnings
brought
forwardTotal
retainedearnings

51,00050,0009,073

59,073

1,094

8,169

9,263

Dividends of surplus
Net income

Total
shareholders’ equity

119,337

△ 134

△ 134

△ 134

576

576

576

Net changes of items otherthan shareholders’ equity

Total changes of items
during the period
Balance at the end of theperiod

-

-

-

-

-

442

442

442

51,00050,0009,073

59,073

1,094

8,611

9,706

119,779

Valuation and translation
adjustments
Valuation
Total
difference
valuationonandavailabletranslation
for-saleadjustments
securities
Balance at the beginning of
the period
Changes of items during theperiod

45

45

576

Net income

Total changes of items
during the period
Balance at the end of theperiod119,382△ 134

Dividends of surplus

Net changes of items otherthan shareholders’ equity

Total net
assets

△ 16

△ 16

△ 16

△ 16

△ 16

425

28

28

119,80827

Financial Data

Notes to Accounting Items (FY2021)
Amounts less than ¥1 million are rounded down.
Material accounting policies
1. Standards for evaluation of securities and valuation methods used
As with available-for-sale securities, securities are valued by the market value method (with the sales price calculated by the moving average method). Provided,
however, that regarding stocks and other securities for which market prices are not available, the original purchase prices are employed based on the moving
average method.
Note that the full amount of adjustments in the value of available-for-sale securities is accounted for by adding such amounts directly to net assets.
2. Valuation standards and methods for derivative transactions
Valuation of derivative transactions shall use the market value method.
3. Depreciation methods(1) Tangible fixed assets (excluding leases)
Depreciation of tangible fixed assets is calculated by the declining-balance method, with the exception of buildings (excluding equipment installed in buildings),
and facilities attached to buildings and structures acquired on or after April 1, 2016, which are depreciated by the straight-line method.
Estimated useful lives of major items are as follows:
Buildings 3 to 50 years
Others 2 to 20 years(2) Intangible fixed assets (excluding leases)
Intangible fixed assets are amortized by the straight-line method. Software for internal use is amortized over its estimated useful life (mainly 5 years).
(3) Lease assets
Lease assets for which the ownership does not transfer and are included in tangible fixed assets are depreciated using the straight-line method over theestimated useful life. Note that for those leases that are based on contracts providing for guarantees of residual value the assets are depreciated down to thespecified residual value, and all other assets are depreciated to zero.
4. Standards for translating foreign currency assets and liabilities into yen
Foreign currency assets and liabilities are translated into Japanese yen at the exchange rate prevailing at the balance sheet date.
5. Standards for calculating reserves(1) Provision for bonuses
To provide for the payment of bonuses, our Company sets aside a reserve for bonuses for employees in the amount of the estimated bonuses attributable to thefiscal year under review.
(2) Provision for retirement benefits
To provide for the payment of retirement benefits to employees, CBJ sets aside the reserve necessary at the fiscal year-end to cover such benefits, based on
estimates of its retirement benefit obligations and the expected value of pension plan assets. In addition, in calculating retirement benefit liabilities, the expectedamount of retirement benefit payments through the end of the subject fiscal year is allocated to the fiscal year under the benefit formula standard. Please note thatthe method for amortizing expenses or recognizing gains arising due to actuarial differences is as follows.
Actuarial differences: The unrecognized net actuarial difference accrued in each fiscal year is amortized proportionately using the straight-line method over a
specified number of years (5 years), which is within the average remaining years of service in each year when the obligations are incurred,commencing from the next fiscal year of incurrence.
6. Method of recording revenue
Fiduciary fees, and fees and commissions include fees received as consideration for asset administration services, and the Company has obligations to performthe services based on contracts, etc. Given that those obligations are satisfied by providing services over a period of time, revenue is primarily recognized over theperiod in which the services are provided.

Changes in accounting policies(Application of the Accounting Standard for Revenue Recognition)
Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other relevant policies have been applied from the
beginning of the fiscal year under review to recognize revenue in the amount expected to be received in exchange for the promised goods or services
when control of the goods or services is transferred to the customer. The application of the standard has no impact.
(Application of the Accounting Standard for Calculation of Fair Value)
The “Accounting Standard for Calculation of Fair Value” (ASBJ Statement No.30, July 4, 2019) and other relevant policies have been applied from the
beginning of the fiscal year under review. The application of the standard has no impact.

Significant accounting estimates
Items whose amounts are recorded in the financial statements for the fiscal year under review based on accounting estimates and that may have a significant
impact on the financial statements for the following fiscal year are as follows.
1. Impairment loss on software(1) Amounts recorded in the financial statements for the fiscal year under review
Software¥55,345 million
Impairment loss
¥468 million(2) Information that contributes to an understanding of the content of significant accounting estimates for the identified items
1) Calculation method
The calculation method of impairment loss is described in “Notes to Accounting Items (Statements of Income), 2.”
2) Key assumption
The key assumption is the recoverability based on the expected future use of the software, etc.
3) Impact on the financial statements for the following fiscal year
Changes in initial assumptions about important software, such as changes in the expected future use, may have a material impact on the amount of softwarein the financial statements for the following fiscal year.

Notes to Accounting Items(Balance Sheets)
1. The full amount of loans is outstanding to the government of Japan.
2. Assets pledged as collateral are as follows.
Assets pledged as collateral
Loans and bills discounted¥1,858 million
Liabilities corresponding to assets pledged as collateral
The above is collateral for overdraft transactions with the Bank of Japan, and there is no outstanding balance of corresponding liabilities as of the end of fiscal year
under review.
In addition to the above, collateral for exchange settlement and other transactions has been presented in the form of securities amounting to ¥30,003 million.
Other assets include CCP guarantee deposits of ¥42,512 million and guarantee deposits and others of ¥3,851 million.

28

3. Overdraft contracts provide for making loans up to a specified limit, provided there are not violations of the provision of contracts, when loan requests are received
from customers. The unexercised balance of loan commitments under these contracts is ¥2,158,400 million, and the remaining contract terms are 1 year or less forthe full amount.
Note that, since most of these contracts expire without requests for overdrafts, the unexercised balance of loan commitments under these contracts will notnecessarily have an effect on the cash flow. Many of these contracts incorporate provisions that allow our Company to reject the loan or reduce the maximum loan
amount to be accepted if financial conditions change, claims need to be protected, or there are any other reasonable grounds. If necessary, real estate, securities
and other collateral will be secured at the time of contract, and even after the contract is concluded, the business conditions of customers are periodically monitored
based on predetermined internal procedures, and contracts are reviewed and credit protection measures are taken as necessary.
4. Accumulated depreciation of tangible fixed assets: ¥5,973 million
5. The principal amount of trusts with principal-guaranteed features is ¥320,417 million in money trusts.
6. Total monetary claims on affiliates: ¥2,497 million
7. Total monetary obligations outstanding to affiliates: ¥8,347 million(Statements of Income)1. The negative figure for interest on due from banks in interest income is due to the fact that, as a consequence of the application of negative interest rates to the
Bank of Japan current deposits, interest on due from banks became negative on a net amount basis.
2. Since the recoverability of idle assets (some software) was not recognized, the book value of such assets was reduced in its entirety, with the relevant decrease of¥468 million recorded as impairment loss.
While our Company’s business assets as a whole are grouped together, idle assets are grouped independently.
3. Income related to transactions with affiliates
Total income from trust transactions:¥5,420 million
Total income from fees and commissions:¥598 million
Expenses related to transactions with affiliate
Total expenses related to other businesses and other ordinary transactions:¥20 million(Statements of Changes in Net Assets)
1. Matters related to class and total number of shares issued and the class and number of treasury stock
Total number outstanding at
Increase during the period
Decrease during the period
the beginning of the period
Shares issued
Common stock
2,040
Total
2,040
-

Balance at the end of theperiod(Thousand shares)
Remarks

2,040
2,040

(Note) There is nothing applicable in relation to treasury stock.
2. Dividends(1) Dividends paid during the fiscal year
(Resolved by)Type of shares
Ordinary General
Meeting of Shareholders
Common stock
held on June 30, 2021

Total dividends

Dividends per share

Record date

Effective date

¥134 million¥66

March 31, 2021

June 30, 2021

(2) Of dividends for which the record date belongs to the fiscal year under review, those whose effective date is after the last day of the fiscal year under review.
(Resolved by)Type of shares
Total dividends
Source of dividends Dividends per share
Record date
Effective dateOrdinary General
OthersMeeting ofCommon stock¥114 million¥56
March 31, 2022
June 30, 2022
Shareholders held on
Retained earnings
June 29, 2022

(Financial Instruments)
1. Matters related to the status of financial instruments(1) Policy on financial instruments
As a bank specializing in asset administration, our Company conducts the operation of banking accounts with limited risks.
(2) Contents of and risks associated with financial instruments
Our Company’s financial assets, in addition to deposits in the Bank of Japan and other institutions, comprise Japanese Government Bonds,
localgovernment bonds, loans to the Japanese government, call loans, negotiable certificate of deposits and fixed-term deposits. Credit risk and market risk
are limited by confining operations within one year as a general rule, and restraining their size and content to the minimum necessary.
On the other hand, our Company’s financial liabilities are primarily borrowed money from trust accounts and deposits. The balance of such liabilities is kept
at a reasonable level, and our Company avoids liquidity risk by limiting its asset administration operations to highly liquid financial instruments.
(3) Risk management relating to financial instruments
1) Credit risk management
Our Company’s principal credit risks arise in the management of idle funds generated by our asset administration business. Our Company has
established a “Credit Risk Management Policy,” which calls for restraint in the size and content of such investments to the minimum required for
conducting business. Moreover, the Risk Management Department sets various credit risk position limits based on the “Credit Risk Management Rules,”and monitors the observance of these limits on a daily basis.
2) Market risk management
Our Company strives for safe and secure management, by establishing a “Market Risk Management Policy” that calls for limiting market risk to the size andcontent required in connection with business and not conducting management for the purpose of capital gains. Moreover, the Risk Management Department
sets various market risk position limits based on the “Market Risk Management Rules,” and monitors the observance of these limits on a daily basis.
Our Company’s market risks arise mainly from the effects of interest rate risk, and the major financial instruments subject to this risk are Japanese
Government Bonds, local government bonds, loans to the Japanese government, call loans, negotiable certificate of deposits and fixed-term deposits. For thesefinancial instruments, CBJ employs the Basis Point Value (BPV) method (which measures the change in the value of these assets for each one basis point(0.01%) movement in interest rates) for quantitative analysis to manage their interest rate risk. As of March 31, 2022, analyses based on the BPV method
indicate that the interest rate risk for a basis point movement in interest rates is ¥7 million. Please note that this movement in asset prices assumes that risk
factors, excluding interest rate risk, remain unchanged, and does not take account of correlations between interest rates and other risk causal factors.
3) Liquidity risk management
Our Company manages idle cash generated by our asset administration business on a continuing basis and limits such management without liquidity
risk to the fullest extent possible as provided for in our “Liquidity Management Policy.” Moreover, the Risk Management Department sets various position
limits based on the “Liquidity Risk Management Rules,” and monitors the observance of these limits on a daily basis.
(4) Supplementary explanation of fair value of financial instruments
Since the fair value of financial instruments involves certain assumptions, in cases where assumptions are subject to change, the value of assets may alsochange.

29

Financial Data

2. Fair values of financial instruments
The differences between the carrying amounts on the balance sheets and fair values, as of March 31, 2022, are shown below. Stocks with no market prices
available are not included in the following table (see Note 1). Cash and due from banks, call loans, loans, foreign exchange (assets), deposits, call money, andborrowings from trust accounts are mainly settled in a short period of time, and their fair values approximate their book values. Accordingly, notes are omitted.
(¥ million)
Balance sheet amount(1) Securities
Available-for-sale-securities
Total assets
Derivative transactions (*1)
(1) Those for which hedge accounting is
not applied
Total derivative transactions

Fair value

Difference

64,99464,99464,99464,994

-

△0

△0

-

△0

△0

-

(*1) Derivative transactions included in Derivatives other than for trading-assets and liabilities are presented collectively. Net claims and obligations arising fromderivative transactions are presented in net amounts. Items that are net liabilities in total are presented with a triangle “△”.
(Note 1) The balance sheet amounts of financial instruments for which market prices are not available are as follows, and they are not included in “Available-forsale-securities” in the fair value information of financial instruments.
(¥ million)
Category
Balance sheet amountUnlisted stocks
510
Unlisted stocks are not included in fair value disclosure in accordance with Paragraph 5 of the “Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No. 19, March 31, 2020).
(Note 2)

Redemption schedule of securities with maturity dates after the closing date
Over one year to Over three years to Over five years to Over seven years
One year or lessthree years or less five years or less seven years or less to ten years or lessSecurities
Available-for-sale-securities with
36,812
28,122maturities
Total

36,812

28,122--(¥ million)
Over ten years--

3. Matters concerning breakdown by the level of fair value of financial instruments

The fair values of financial instruments are classified into the following three levels according to the observability and significance of the inputs used to
calculate the fair values.
Level 1 fair value: Fair value calculated using the market prices of the assets or liabilities formed in an actively traded market for which fair value is to be
determined, among the inputs for the calculation of the observable fair value
Level 2 fair value: Fair value calculated using inputs for the determination of fair value other than Level 1 inputs among inputs for observable fair value
Level 3 fair value: Fair value calculated using inputs for the determination of unobservable fair value
Where multiple inputs that have a significant impact on the determination of fair value are used, the fair value is classified into the level with the lowest
priority in the calculation of fair value among the levels to which the inputs belong.
Financial instruments recorded on the balance sheet at fair value
Category(¥ million)
Fair value

Level 1

Level 2

Level 3

Total

30,003-31,962
3,028-

30,00331,962
3,028

30,003

6
34,998-6
65,001

-

7
7

-

7
7

Securities
Available-for-sale-securities
Government bonds
Local government bonds
Corporate bonds
Derivative transactions
Currency-related
Total assets
Derivative transactions
Currency-related
Total liabilities(Note 1) Explanation of valuation techniques used in the determination of fair value and inputs to the calculation of fair value
Securities
Securities for which unadjusted quoted prices in actively traded markets are available are classified as Level 1 fair value, and include government
bonds. Those for which quoted prices are used, but where the market is not active, are classified as Level 2 fair price, and include municipal bonds
and corporate bonds.
Derivative transactions
Since derivative transactions are currency-related transactions (forward exchange contracts), their fair value is calculated based on the
discounted present value method where interest rates and exchange rates are used in the valuation technique. They are classified as Level 2
because they do not use inputs that are not observable.
(Securities)
Negotiable certificate of deposits in “Due from banks” are included in addition to “Government bonds,” “Local government bonds,” and “Corporate bonds.”
Available-for-sale-securities (as of March 31, 2022)
Type
Bonds
Local government bonds
Corporate bonds
Subtotal
Bonds
Government bonds
Those with a balance sheet
amount not exceeding the
Local government bonds
acquisition cost
OthersSubtotal
Total
Those with the balance
sheet amount exceeding
the acquisition cost30(¥ million)
Balance sheet
amountAcquisition cost

29,0583,028
32,08729,016
3,027
32,044420
4330,003
2,903
40,00072,906104,994

30,0042,904
40,00072,908104,953

△1
△0
△2
41

Difference(Tax effect accounting items)
The breakdown of factors giving rise to the accrual of deferred tax assets and liabilities is as follows.
Deferred tax assets
Provision for retirement benefits¥288 million
Asset retirement obligations
254
Impairment loss denied
208
Provision for bonuses
190Enterprise tax payable
96
Depreciation denied
38
Others304
Total deferred tax assets
1,381
Deferred tax liabilities
Tangible fixed assets
184
Prepaid pension expenses
131
Valuation difference on available-for0
sale securities
Total deferred tax liabilities
316
Net deferred tax assets¥1,064 million(Transactions with related parties)(1) Parent company and major corporate shareholders
Type

Name ofcompany

Other affiliated company

Resona Bank,
Limited(¥ million)

Percentage
ownership
OwnedDirectly
16.6%

Relationship withrelated party

Type oftransactions

Transaction
amountRe-entrustment
Entrusts asset
fees, receipt ofadministration to
fees
CBJ(Note 1)

5,998

Balance at end of
Accounting item
periodAccrued income

1,673

Suspense
receipt

8,344

Terms of transactions and the decision policies, etc.
(Note 1) Fees for re-entrustment and other fees that are based on cost are decided through negotiations.
(2) Subsidiaries and affiliates, etc.
Not applicable.
(3) Other companies with indirect capital affiliation(¥ million)

Name ofcompany

Percentage
ownership

Subsidiary of otheraffiliated company

Sumitomo Mitsui
Trust Bank,
Limited

-Subsidiary of otheraffiliated company

Mizuho Trust &Banking Co.,Ltd.

-

Subsidiary of otheraffiliated company

MizuhoInformation &Research
Institute, Inc.

Type

-

Relationship withrelated party

Type oftransactions

Re-entrustment
Entrusts asset
fees, receipt ofadministration to
fees
CBJ(Note 1)
Re-entrustment
Entrusts asset
fees, receipt ofadministration to fees
CBJ
(Note 1)
Outsourcing ofsystem operation
Outsourcing of(Note 2)system operation
Outsourcing ofand software
softwaredevelopment
development(Note 2)

Transaction
amount)23,183

Accounting item
Accrued income

6,505

Suspense
receipt

27,275

Accrued income
15,503

Balance at end of
period960

Suspense
receipt

13,011

3,760

Accruedexpenses

248

4,189

Other liabilities(Note 3)677

Terms of transactions and the decision policies, etc.
(Note 1) Fees for re-entrustment and other fees that are based on cost are decided through negotiations.
(Note 2) Prices, etc. for the entrusted system operation and software development are negotiated and determined based on the consideration calculated by
Mizuho Research & Technologies, Ltd.
(Note 3) They are included in “Accounts payable” under other liabilities.
(4) Directors and other individual shareholders
Not applicable.

(Revenue recognition)
Information which provides a basis for understanding of revenue is as per the description in “Material accounting policies, 6. Method of recording revenue.”(Per share information)
Net assets per share of common stock:
Net income per share of common stock:¥58,729.49¥282.7231

Financial Data

Confirmation Statement from Management
I have confirmed that the financial statements (balance sheets, statements of income, andstatements of changes in net assets) for the second term, covering the period from April 1,
2021 to March 31, 2022, are presented appropriately and that the internal auditing related
to the preparation of these financial statements functioned effectively.

June 29, 2022
Custody Bank of Japan, Ltd.

Yoshikazu
Tanaka, President &Representative Director

Auditors’ Statement
The Company has been audited by Accounting Auditor KPMG AZSA LLC in accordancewith Paragraph 1, Article 396 of the Companies Act, and received the Audit Report
indicating that all material items pertaining to assets and income have been presented
appropriately in the documents prepared pursuant to the provisions of Paragraph 1, Article
20 of the Banking Act.

32

Fair Value Information of Securities, etc.
Securities
Under this item, negotiable certificates of deposit in “Due from banks” are included inaddition to “Government bonds,” “Local government bonds,” and “Corporate bonds.”○Available-for-sale securities(¥ million)

FY2020Type

Balance sheet amount

Acquisition cost

Difference

Bonds
Those with the balance
sheet amount exceeding
the acquisition cost

Government bonds
Local government
bonds

2

32,755

54

9,644

9,635

8

72,397

65

2,213

2,213

△0

99

100

△0

40,00040,000-42,31342,313△0

114,776

114,71165

Bonds
Localgovernment
bonds
Corporate bonds
OthersSubtotal

Total

30,00632,80972,463

Corporate bonds
SubtotalThose with a balance
sheet amount notexceeding the acquisitioncost

30,009(¥ million)

FY2021
Type
Those with the balance
sheet amount exceeding
the acquisition cost

Balance sheet amount

Bonds
Local government
bonds

29,058

Corporate bonds
Subtotal

Acquisition cost

29,016

Difference

42

3,028

3,027

0

32,08732,04443

30,00330,004

△1
△0

Bonds
Those with a balance sheet
amount not exceeding theacquisition cost

Government bonds
Local government
bonds

2,903

2,904

40,00040,000-72,906

72,908△2

104,994

104,953

41

OthersSubtotal
Total○Valuation difference on available-for-sale securities(¥ million)

FY2020

Valuation difference

FY2021

65

41

Available-for-sale-securities

65

41

Deferred tax assets(△ indicates deferred tax liabilities)

△ 19

△ 12

45

28

Valuation difference on available-for-sale securities(Note) Foreign currency translation adjustments for foreign currency-denominated stocks without market prices areincluded in “Available-for-sale securities” in “Valuation difference.”

Money in trust
Not applicable.

33

Financial Data

Derivative Transactions○Derivative transactions for which hedge accounting is not applied
Regarding unhedged derivative transactions, the contract amount or theamount of principal equivalent stipulated in the contract, fair value, andunrealized gain or loss as of the closing date for each type of transaction are
as follows. Contract amount, etc. do not per se indicate the market risk ofderivative transactions.
・Interest-related Transactions
Not applicable.

・

Currency-related Transactions(¥ million)

FY2020Contract
amount, etc.

Contract amount, etc. of
those exceeding one year

Type

Over-the-counter

Exchange
contracts
Sold

15,334-0

0

Bought24,193

-

59

59

/

/

60

60

Total

Fair value

Unrealized gain or
loss

Category(¥ million)

FY2021
Contract
amount, etc.

Contract amount, etc. of
those exceeding one year

Type

Over-the-counter

Exchange
contracts
Sold

6,610

-

△7

Bought

3,305

-

6

6

/

/

△0

△0

Total
(Note)

Fair value

Unrealized gain or
loss

Category△7

The above transactions are recorded at fair value, with unrealized gain or loss included in the statements ofincome.

・Transactions related to stocks, bonds and commodities, and other derivativetransactions
Not applicable.

Other Asset Situation○ Status of claims under the Banking Act and the Financial Revitalization Act(¥ million)

FY2020

FY2021Claims to bankrupt and substantially bankrupt debtors--

Doubtful claims--

Claims under close monitoring--

Loans that are delinquent for three months or longer--

Restructured loans--

Subtotal--

Ordinary loans

31,141

1,858

Total

31,141

1,858○ Amount of write-offs of loans: Not applicable.
○ Balance of allowance for loan losses and its changes: Not applicable.

34

Indicators for Banking Business(1) Indicators showing the status of key business○Gross business profit(¥ million)

FY2020
Domestic
Business
Division

FY2021

Global Business
Division

Domestic
Global BusinessBusiness Division
Division

Total

Total

Gross business profit
45,8852
45,887
54,837
3 54,841
Gross business profit margin
0.30%
0.02%
0.30%
0.34%
0.10%
0.34%
Fiduciary fees
32,75732,75738,012- 38,012△ 4,0810△ 4,081△ 2,780
1 △ 2,779
Net interest income
Net fees and commissions
17,2090
17,21019,604
0 19,605
Net trading income
Other net operating income
1122(Note) Gross business profit margin = Gross business profit / Average balance of interest-earning assets × 100○Net business profit(¥ million)

FY2020Net business profit
Effective net business profit
Net business profit from core operations
Net business profit from core operations(excluding gain or loss on cancellation of investment trusts)

FY2021

587
587
587

1,941
1,941
1,941

587

1,941

○Average balance of interest-earning assets and interest bearing liabilities(¥ million)

FY2020

FY2021

Domestic
Global BusinessBusiness Division
DivisionInterest-earning
assetsAveragebalance(5,876)
15,214,955△ 4,065

Averagebalance(5,876)

Interest

15,335,685(0)
15

Yield on interestearning assets
Yield on interest
bearing liabilities
Interest rate spread(Notes) 1.
2.

Total

(1,093)

7,336 15,216,416(0)1△ 4,064

Interest
Interest-bearing
liabilities

Domestic
Global BusinessBusiness Division
Division

Total

15,902,888△ 2,774

3,827 15,905,622(0)
3△ 2,771(1,093)2,980 15,332,789
1

17

16,037,767(0)
6△ 0.02%0.02%△ 0.02%

0.00%

0.05%

△ 0.02%△ 0.02%

3,813 16,040,487
1

7△ 0.01%0.08%△ 0.01%

0.00%

0.00%

0.04%

0.00%

△ 0.02%△ 0.01%0.03%△ 0.01%

The interest-earning assets are shown after deducting the average balance of non-interest earning due frombanks (¥387 million in FY2020 and ¥456 million in FY2021).
The figure inside the brackets shows the average balance and interest on loans between the Domestic
Business Division and the Global Business Division.

○Analysis of increase or decrease in interest income and expenses(¥ million)

FY2020Net changes in interest earned
Increase or decrease
due to balance
Increase or decrease
due to interest rate
Net change in interest paid
Increase or decrease
due to balance
Increase or decrease
due to interest rate
(Note)FY2021

Domestic
Business Division

Global Business
Division

Domestic
Global BusinessBusiness Division
Division△ 1,8181△ 1,816

1,291

1

1,293

△ 982

-

△ 982

△ 176

△1

△ 176

△ 836

1

△ 834

1,468

2

1,469

△ 16

1

△ 15

△9

0

△9

9

1

9

0

0

0

△ 26

0

△ 24

△ 10

△0

△ 10

Total

Total

Where the increase/decrease factors due to the balance and interest rate overlap each other, they are prorated according
to their respective portion of change.

35

Financial Data

○Rate of return(%)
FY2020Ordinary profit to total assets
Ordinary profit to capital
Return on assets
Return on equity(Notes)

FY2021
0.00
1.37
0.00
0.75

0.01
1.76
0.00
0.52

1.

Ordinary profit (net income) to total assets = Ordinary profit (net income) / Average balance for total assets(excluding customers’ liabilities for acceptances and guarantees) × 100

2.

Ordinary profit (net income) to capital = Ordinary profit (net income) / Shareholders’ equity and averagebalance of valuation and translation adjustments × 100(2) Indicators for deposits○Average balance by type of deposit(¥ million)

Deposits
Liquid deposits
Time and savings
deposits
Other deposits
Negotiable certificate
of deposits(Notes)

FY2020
Domestic
Global Business
Total
Business Division
Division
6,799,176- 6,799,176
6,790,742- 6,790,742

FY2021
Domestic
Global Business
Total
Business Division
Division
7,347,650- 7,347,650
7,336,660- 7,336,660

-

-

-

-

-

-

8,433

-

8,433

10,990-10,990

-

-

-

-

-

-

1.

Liquid deposits = Current deposits + Ordinary deposits + Saving deposits + Deposits at notice2.

Time and savings deposits = Time deposits○Balance of time deposits by average life
Not applicable.
(3) Indicators for loans, etc.
○Average balance by loan item(¥ million)

Loans on bills
Loans on deeds
Overdraft
Discounted bill
Total

FY2020
Domestic
Global Business
Total
Business Division
Division
53,07353,073
16,544
16,544
69,617
69,617

FY2021
Domestic
Global Business
Total
Business Division
Division
16,10916,10925,54625,546
41,65541,655○Balance of loans and bills discounted by average life(¥ million)

FY20201 year or less
Floating interest rate
Fixed interest
rate
Total
Floating interest rate
Fixed interest
rate

36

FY2021

31,141-

1,858-

31,141

1,858

31,141-

1,858-

31,141

1,858

○ Breakdown by collateral for loans and bills discounted(¥ million)

FY2020

FY2021

Securities--

Claims--Commodities--

Real estate--

Guarantees--

Unsecured

31,141

1,858

Total

31,141

1,858○ Balance of loan guarantees (acceptances and guarantees)
Not applicable.
○ Balance of loans and bills discounted by purpose(¥ million)

FY2020

FY2021Fund for capital
investment--

Working capital

31,141

1,858

Total

31,141

1,858○ Balance of loans and bills discounted by industry(¥ million)

FY2020

FY2021

BalanceComposition
ratio

BalanceComposition
ratio

Government of Japan

31,141100.00%1,858

100.00%Total

31,141100.00%1,858

100.00%○ Balance of loans to SME
Not applicable.
○ Balance of specific foreign claims
Not applicable.
○ Loan-deposit ratio(%)

FY2020

FY2021

Domestic
Global BusinessBusiness Division
Division

Total

Domestic
Global BusinessBusiness Division
Division

Total

Loan-deposit ratio
Balance at end of
periodAverage during theperiod

0.42

-

0.42

0.03

-

0.03

1.02

-

1.02

0.56

-

0.56

37

Financial Data

(4) Indicators for securities○ Average balance of trading securities
Our Company does not own trading securities.

○ Balance of securities by average life(¥ million)

1 year or lessOver one year
to three years
or less

FY2020Over threeThose with noyears to five Over five years
prescribed
years or lessperiodTotal

Government bonds

30,009----30,009Local government
bonds

3,014

32,009---35,023

Corporate bonds

6,700

3,044

-

-

-

9,744

Stocks

-

-

-

-

490

490

Other securities

-

-

-

-

18

18

-

-

-

-

18

18

39,72335,053--509

75,286

Foreign stocks
Total(¥ million)

FY2021
Over threeThose with noyears to five Over five years
prescribed
years or lessperiod1 year or lessOver one year
to three years
or less

Government bonds
Local government
bonds

30,003----30,003

4,819

27,142---

31,962

Corporate bonds

2,002

1,026

-

-

-

3,028

Stocks

-

-

-

-

490

490

Other securities

-

-

-

-

19

19

-

-

-

-

19

19

36,82528,169--510

65,504Foreign stocks
Total

Total

○ Average balance of securities(¥ million)

FY2020
Domestic
Global BusinessBusiness Division
Division

Total

FY2021
Domestic
Global BusinessBusiness Division
Division

Total

Government bonds
Local government
bonds

28,209-28,20932,808- 32,808

25,281-

25,28133,355- 33,355

Corporate bonds

28,181-

28,181

4,149

-

4,149

417

-

417

490

-

490

-

18

18

-

19

19

-

18

18

-

19

19

82,09018

82,10870,803

StocksOther securities
Foreign stocks
Total

19 70,823○ Security-deposit ratio(¥ million)

FY2020
Domestic
Global BusinessBusiness Division
Division
Security-deposit ratio
Balance at end of
periodAverage during theperiod38

Total

FY2021
Domestic
Global BusinessBusiness Division
Division

Total

1.01

-

1.01

1.13

-

1.13

1.20

-

1.20

0.96

-

0.96

Matters Concerning Bank Management○ Initiatives to improve the management of SMEs and revitalize local communities
As a bank specializing in asset administration, our Company provides clients withservices dedicated to asset administration. Due to our operational characteristics, wecurrently do not provide loans for business funds to companies, including small andmedium-sized enterprise customers, or for customers who wish to use housing loans. For
this reason, there are no direct activities taken to improve the business of SMEs andrevitalize local communities.

39

Indicators for Trust Business(1)

Balance table of assets in trust(¥ million)

FY2020

FY2021(Assets)
Loans and bills discounted

310,640

Loans on deeds

310,640-

217,702,529

153,512,487

Government bonds

60,249,867

28,025,752

Local government bonds

4,137,025

2,962,296

Securities-

Short-term bonds

942,302970,611

Corporate bonds

10,760,507

6,811,947

Stocks93,826,915

65,619,647

Foreign securities

38,138,966

38,857,561

Other securities

9,646,945

10,264,670

Securities in investment trusts

60,364,560

65,851,776

Foreign securities in investment trusts

35,004,138

40,892,086

Interests in trusts

72,490,388

79,151,418

Trust securities

25,314,760

24,887,467

Monetary claims

11,442,299

13,233,846

Life insurance claims

487,859

496,427

Housing loan claims

3,274,793

3,308,370

7,679,646

9,429,047

Other monetary claims
Other claims

10,939,011

9,552,285

Call loans

9,308,437

10,093,784

Loans to banking account9,654,126

11,186,487

Cash and due from banks

15,068,998

13,297,808

Due from banks

15,068,998

13,297,808

467,599,890

421,659,447

Total assets(Liabilities)
Designated money trusts

1,310,922

733,749

Corporate investment fund

47,400,264

7,444,116

Monetary trusts other than money in trust

3,501,154

3,446,297

Trust of securities

4,575,795

3,711,719

Monetary claims in trust

3,274,793

3,308,370

407,536,960

403,015,192

467,599,890

421,659,447

Composite trusts
Total liabilities

40

(2)

Acceptance of money trusts, etc.
○ Fiscal year-end balance of trust(¥ million)

Money trusts

FY2020

FY2021

48,711,187

8,177,866(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of principal by trust period(¥ million)

Money trusts
Less than 1 year
1 year or more to less than 2 years

45,5804,305

44,884,164

6,133,534

2 years or more to less than 5 years
5 years or more

FY2021

FY2020--1,579,017

2,021,325

Others627,927

320,417

Total

47,136,689

8,479,582(Note) There is nothing applicable for loan trusts.

(3)

Investment in money trusts, etc.
○ Investment balance(¥ million)

Money trusts
Loans and bills discounted

FY2020

FY2021

310,640-

Securities

43,148,951

4,950,556

Total

43,459,592

4,950,556(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of loans by accounting item(¥ million)

Money trusts

FY2020Loans on bills

FY2021--Loans on deeds

310,640-

Discounted bill--

310,640-

Total(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of loans by contract period(¥ million)

Money trusts

FY2020

FY2021

1 year or less

310,640-

Total

310,640-(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

41

○ Breakdown of loans by collateral(¥ million)

Money trusts

FY2020

FY2021

Securities--

Claims--Commodities--

Real estate--

Guarantees

111,382-

Unsecured

199,258-

Total

310,640-(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of loans by purpose(¥ million)

Money trusts

FY2020Fund for capital investment

FY2021--

Working capital

310,640-

Total

310,640-(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of loans by industry(¥ million)

FY2020

FY2021

BalanceComposition
ratio

Financial and insurance

111,382

35.86 %--

Government, etc.

199,258

64.14 %

-

-

Total

310,640

100.00 %--Money trusts

BalanceComposition
ratio(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

○ Balance of loans to SME, etc. in relation to money trusts
Not applicable.
○ Securities(¥ million)

Money trusts

FY2020

FY2021Government bonds

33,429,388

657,694

Local government bonds

1,282,508

11,408

Corporate bonds

4,299,201

195,673

Stocks2,218,278

2,343,140

Foreign securities

1,217,043

1,081,880

Other securities

702,530

660,759

43,148,951

4,950,556

Total(Note) There is nothing applicable for annuity trusts, employees’ property formation benefit trusts, and loan trusts.

42

(4)

Status of trusts with principal-guaranteed features○ Fiscal year-end balance of trusts (including trusts that have been re-entrusted for theinvestment of trust assets)(¥ million)

Money trusts

FY2020

FY2021(Assets)
Others627,927

320,417

Total assets

627,927

320,417627,927

320,4170-627,927

320,417(Liabilities)
Principal
OthersTotal liabilities○ Amount of risk-monitored loans for trusts with principal-guaranteed features (claims
pursuant to the Act on Engagement in Trust Business by Financial Institutions and the
Financial Revitalization Act)Not applicable.

43

Capital Adequacy Status, etc.
This section is intended to disclose matters that are specified separately by the Commissioner of the Financial Services
Agency regarding the status of capital adequacy, etc. (Financial Services Agency Notification No. 7 of 2014), in accordance with
Paragraph 1 (5) (d), Article 19-2 of the Ordinance for Enforcement of the Banking Act (Ordinance of the Ministry of Finance No.
10 of 1982).

● Disclosure Concerning the Composition of Capital
Summary table of the non-consolidated capital adequacy ratio (Japanese standard)(¥ million)

FY2020

FY2021

119,202

119,665Core Capital: Instruments and reserves (1)Directly issued qualifying common shares or preferred shares
mandatorily convertible into common share capital plus related capitalsurplus and retained earnings
Of which, capital and capital surplus

110,073

110,073

Of which, retained earnings

9,263

9,706

Of which, treasury stock (△)

-

-

134

114

Of which, planned distribution of income (△)--

Subscription rights to acquire common shares or preferred shares
mandatorily convertible into common shares

Of which, other than above--

Reserves included in Core Capital: Instruments and reserves--

Of which, general allowance for loan losses--

Of which, eligible provisions--

Eligible non-cumulative perpetual preferred shares subject totransitional arrangements included in Core Capital--

Eligible capital instruments subject to transitional arrangements
included in Core Capital--

Capital instruments issued through the measures for strengthening
capital by public institutions included in Core Capital--

Amount equivalent to 45% of land revaluation excess subject totransitional arrangements included in Core Capital--

119,202

119,665

35,17338,429Core Capital: Instruments and reserves(a)Core Capital: Regulatory adjustments (2)Total intangible fixed assets (excluding those relating to mortgage
servicing rights)
Of which, goodwill (including those equivalent)--

35,17338,429Deferred tax assets (excluding those arising from temporary
differences)--

Shortfall of eligible provisions to expected losses--

Capital increase due to securitization transactions--

Of which, other than goodwill and mortgage servicing rights

Gains and losses due to changes in own credit risk on fair valued
liabilities

-

-

245

298

Investments in own shares (excluding those reported in the Net
Assets)--Reciprocal cross-holdings in capital instruments issued by otherfinancial institutions for raising capital that are held by the Bank--

Prepaid pension costs

Investments in the capital of banking, financial and insurance entities
that are outside the scope of regulatory consolidation

-

-

8,279

10,063

Of which, significant investments in the common stock of otherfinancial institutions--

Of which, intangible fixed assets relating to mortgage servicing
rights

-

-

8,279

10,063--

Of which, significant investments in the common stock of otherfinancial institutions--

Of which, intangible fixed assets relating to mortgage servicing
rights--Amount exceeding the 10% threshold on specified items

Of which, deferred tax assets arising from temporary differences
Amount exceeding the 15% threshold on specified items

Of which, deferred tax assets arising from temporary differences
Core Capital: Regulatory adjustments

-

-

(b)

43,697

48,792(c)

75,50470,873

Capital
Total amount of capital ((a)–(b))

44(¥ million)

FY2020

FY2021

114,591

133,953--

Of which, exposure to other financial institutions--

Of which, other than above--

Risk-Weighted Assets(3)

Total credit risk assets
Of which, total of items included in risk-weighted assets subject totransitional arrangements

Amount equivalent to market risk divided by 8%--

105,791

106,927

Credit risk-weighted assets adjustments--

Amount equivalent to operational risk adjustments--

220,383

240,880

34.26 %

29.42 %

Amount equivalent to operational risk divided by 8%

Total risk-weighted assets(d)Capital Adequacy Ratio
Capital Adequacy Ratio ((c)/(d))● Qualitative Disclosure
1. Main features of regulatory capital instruments
Capital is raised by common stocks.
2. Assessment of capital adequacy under Pillar 2
As a method of assessing capital adequacy, our Company implements management
based on required capital according to the Capital Adequacy Framework (Pillar 1) andthrough integrated risk management according to internal management (Pillar 2).
(1) Capital management
As a bank complying with Japanese standards, we strive to maintain and secure acertain level of required capital in accordance with the Capital Adequacy Framework.
(2) Integrated risk management
Our Company carries out integrated risk management based on the “CapitalManagement Policy,” “Risk Management Policy,” and “Risk Management Rules.”Specifically, after setting limits on capital that consider a certain buffer in times ofstress, we confirm that the integrated risk amount of credit, market and operationalrisks are within the limits. In addition, for liquidity risks that cannot be captured by the
integrated risk amount, stress tests are conducted and regularly reported to the
Executive Management Committee and the Board of Directors, including the status ofcompliance with the limits.
3. Credit risk
(1) Overview of risk management policies and procedures
1) Definition of credit risk
Credit risk refers to “the risk of incurring losses due to a decline in or complete
loss of asset value (including off-balance sheet assets) as a result of thedeterioration in the financial condition of borrowers.”
2) Characteristics of credit risk
The major credit risk in our Company arises from investment transactions ofsurplus funds accompanying asset administration operations, resulting in a large
amount of bad debts (or provision of allowance) due to defaults by major borrowers
or deterioration in their credit standing.
3) Risk management policy
We have established the “Risk Management Policy” which provides the credit risk
management policy of keeping credit risks to be risk-limiting in size and nature.

454) Credit risk management structure
The Risk Management Department, which manages credit risk, supervises
compliance with various limits and verifies the rating system. Monitoring results ofcredit risk amounts, changes in ratings, compliance with limits, etc. are regularly
reported to the Risk Deliberation Committee.
5) Credit rating, self-assessment, and write-off and reserve, etc.
A. Credit rating
As the basis of credit management, “credit rating” represents the credit status ofobligors and the possibility of default and loss in stages. Our Company assigns“internal ratings” to financial institutions, etc. as credit ratings with reference to externalratings.
B. Self-assessment
Self-assessment is a preparatory process for write-offs and reserves, etc. conductedby individually examining the contents of assets owned and categorizing themaccording to the risk level of recovery or impairment of values. Our Company has
established the “Risk Management Policy” and “Asset Assessment Management
Rules” for proper implementation of self-assessment. A borrower is judged for the“obligor category” according to its financial condition at each time of the disclosure ofits financial results or upon each incident that affects its credit. In addition, a“classification category” is periodically determined for each asset based on theassessment result of the obligor category and the protection status, etc., reflected inwrite-offs and reserves, etc. appropriately, and also used for credit risk management.
C. Write-offs and reserves, etc.
Write-offs and reserves, etc. refer to estimating the expected amount of future
losses based on the actual results of self-assessment, and considering the historicalloan losses, etc. in a timely and appropriate manner, and making an allowance for or
write-off of such amount in the account settlement for each half-term. Our Company
has established rules, etc. on write-off and reserves, etc. to ensure proper
management of write-offs and reserves, etc.
(2) Portfolios to which the Standardized Approach is applied
Name of qualified rating agency, etc. used for determining risk weight
Our Company uses the following five qualified rating agencies to determine risk
weights, etc.
〇 Japan Credit Rating Agency, Ltd. (JCR)〇 Rating and Investment Information, Inc. (R&I)
〇 Moody’s Investors Service, Inc. (Moody’s)〇 S&P Global Ratings (S&P)
〇 Fitch Ratings （FitchRatings）
4. Overview of risk management policies and procedures concerning credit risk mitigation(1) Credit risk mitigation
Credit risk control is achieved not only by reducing the balance of credit, but also
by obtaining protection of claims using collateral, guarantees, etc. Such protectionof claims is collectively referred to as the “credit risk mitigation.”
In calculating credit risk assets, our Company reflects the effects of credit risk
mitigation through eligible collateral and guarantees in accordance with theNotification.
(2) Major types of collateral
Our Company is currently mitigating credit risks by accepting qualified financial
collateral, etc., which are regularly evaluated.
5. Overview of risk management policies and procedures for the risks of counterparties ofderivatives transactions and long-settlement transactions
Not applicable.

46

6. Securitization exposure
Not applicable.
7. Market risk
Not applicable.
8. Operational risk
(1) Overview of risk management policies and procedures
Recognizing operational risk as a significant risk in the “Risk Management Policy”
due to our risk profile as a trust bank specializing in asset administration services, wehave prescribed a basic policy of establishing a solid internal management system toprevent such risks and minimizing their impact on business when they materialize.
In order to appropriately manage operational risk in accordance with the above
policy, our Company has established the “Operational Risk Management Rules,”stipulating that risk management departments shall carry out risk management
activities for each risk subcategory described below (Processing Risk, Information
Security Risk, System Risk, Legal and Compliance Risk, Tangible Asset Risk,
Personnel Risk, and Reputational Risk), and that the Risk Management Department
shall establish a management system for planning, promoting, and coordinating all
aspects of operational risk management, as a department that comprehensively
manages operational risks.
Risk management departments and activities for each risk subcategory are as
follows.
1)

Processing risk
・ The Operations Planning Department is responsible for processing risks toplan and promote the management of processing risk.

2) Information security risk
・ Of information security risks, the Operations Planning Department is
responsible for those other than information systems, and the System Risk
Management Department is responsible for those related to information
systems, to plan and promote various risk management.
3) System risk
・ The System Risk Management Department is responsible for system risks toplan and promote the management of system risks.
4) Legal & compliance risk
・ The Compliance Department is responsible for legal and compliance risks toplan and promote legal and compliance risk management.
5) Tangible asset risk
・ The Human Resources & Corporate Administration Department is responsible
for tangible asset risks to plan and promote various types of tangible asset
risk management.
6) Personnel risk
・ The Human Resources & Corporate Administration Department is responsible
for personnel risk to plan and promote personnel risk management.
7) Reputational risk
・ The Risk Management Department is responsible for reputation risk to planand promote various types of reputation risk management.

47

The following activities are carried out as management activities across risk
subcategories.
1) Outsourcing management
・ As various operational risks are inherent in the outsourcing of our Company
business, the Risk Management Department has established the “Outsourcing
Management Rules” to comprehensively coordinate the management ofoutsourcing.
2) Response to severe accidents
・ The “Operational Risk Management Rules” (administered by the Risk
Management Department) set forth standards for the severity of materialized
operational risks, and stipulate actions to be taken according to the severity.
3) Risk Management Deliberation Committee
・ The Risk Management Deliberation Committee (operational risk) has been
established for company-wide coordination for operational risk, run by the Risk
Management Department.
As comprehensive operational risk management activities, company-wide Control
Self Assessment (CSA) is conducted regularly in order to identify, assess, andmonitor operational risks. Countermeasures are formulated with regards to risks
identified as the result of CSA to control and reduce risks.
(2)

Calculation of amount equivalent to operational risk
Calculation method
Our Company calculates operational risk equivalents using the “Basic Indicator
Approach.”

9. Overview of risk management policies and procedures for capital contribution or equity
exposures
Our Company has a credit risk management system in place to manage default andother risks. Regarding the valuation of stocks for which market prices are not available,
the original purchase prices are employed based on the moving average method.
10. Interest rate risk
(1) Overview of risk management policies and procedures
1) Definition of interest rate risk in the banking bookInterest rate risk in the banking book (hereinafter, “IRRBB”) refers to the current
or prospective risk to a bank’s capital and to its earnings, arising from the impactof adverse movements in interest rates on its banking book.
The present value is regarded as the economic value (EVE), and themagnitude of loss at the current interest rate level is measured as ⊿EVE for eachposition. The scope of measurement includes positions with interest rate risk inthe banking book.
⊿NII is measured as a decrease in interest income during the period from therecord date for calculation of interest rate shocks until the date 12 months haveelapsed.
2) Characteristics of IRRBBIRRBB is incurred by a maturity mismatch (gap risk), interest rate mismatch(basis risk), and other factors in the banking book position. The Ratio of ⊿EVE toCore Capital for our Company is well below the regulatory level of 20%,
maintaining a low level of IRRBB.

48

3) Management structure of IRRBBThe Risk Management Department regularly measures IRRBB and reports to the
Risk Deliberation Committee and others.
(2) Overview of interest rate risk calculation methods
1) Calculation method of interest rate risk
The assumptions used in calculating IRRBB are as follows.
・ Core deposits are not set, but liquid deposits are set as funds with no maturity
・ There is nothing applicable in terms of early cancellation of time deposits, early
redemption of personal loans and handling of foreign currencies.
2) Interest rate risk other than ⊿EVE and ⊿NII
The BPV (basis point value) is used to measure and manage interest rate risks.
● Quantitative Disclosure(1) Capital○ Non-consolidated required capital by portfolio category(¥100 million)

FY2020

FY2021Credit risk
Standardized Approach

32.1

35.0

For CCP

13.7

18.5

42.3

42.7

88.1

96.3

Operational risk
Total amount of non-consolidated
required capital

Operational risk equivalents are calculated using the Basic Indicator Approach.

(2)Credit risk
○ Credit risk exposure status
Note: or off-balance sheet exposures, credit equivalents are shown. Exposures are not included when it is
not necessary to calculate the amount of credit risk assets.
There was no significant difference between the year-end balance of credit risk exposures and theaverage risk position during the fiscal year for both the previous fiscal year and fiscal year underreview.

Breakdown by
regionDomestic
Overseas
Total

Off-balance sheet
exposures other thanloans, commitments andderivatives
311
311(¥100 million)

FY2020
Securities

Derivatives

Others

Total

752
0
752

-

169,23750
169,287

170,30050
170,351(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

Derivatives

Others

Total

Domestic

18

654

-

169,276

169,949

Overseas

-

0

-

43

43

18

654

-

169,320

169,993

Total

FY202149

Breakdown by counterparty

For sovereign
For financial
institutions andothersOthersTotal(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives
311

Securities

Derivatives

Others

Total

649

-

166,829

167,790

-

87

-

1,809

1,896

311

15
752

-

649
169,287664
170,351

FY2020(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

Derivatives

OthersTotal

For sovereign
For financial
institutions andothersOthers18619-

166,398

167,036

-

20

-

2,261

2,281

-

15

-

660

675

Total

18

654

-

169,320

169,993

FY2021

Breakdown by period

One year or lessOver one year
OthersTotal

Off-balance sheet
exposures other thanloans, commitments andderivatives
311
311(¥100 million)

FY2020
Securities

Derivatives

Others

Total

397
349
5
752

-

169,107180
169,287

169,816349
185
170,351(¥100 million)

Off-balance sheet
exposures other thanloans, commitments andderivatives

Securities

One year or less

18

368

-

Over one year

-

281

-

Others

-

5

Total

18

654

FY2021
Derivatives

OthersTotal-

169,147

169,534

-

-

281

-

-

172

177

-

-

169,320

169,993○ Overdue exposure status

Not applicable.

○ Allowance for loan losses and write-off of loans

Not applicable.

○ Exposure to which the Standardized Approach is applied
Breakdown by risk-weight category (after applying credit risk mitigation effects)(¥100 million)

FY2020(Risk weight)

0%
10%
20%
100%
250%
1250%
Total

On-balance sheet

Off-balance sheet

Total

167,790
0
2,341
124
83
170,341-

167,790
0
2,341
124
83
170,341

FY2021(¥100 million)(Risk weight)

0%
10%
20%
100%
250%
1250%
Total

50

On-balance sheet

Off-balance sheet

Total

167,036
2,741
124
80
169,983-

167,036
2,741
124
80
169,983

○ Amounts of capital deduction/Exposure to which risk weight of 1,250% is applied
Not applicable.
(3) Credit risk mitigation○ Breakdown of exposures to which credit risk mitigation is applied
FY2020Financial asset
collateral(¥100 million)

Creditderivatives

Guarantees

Total

Standardized Approach
For sovereign
For financial institutions andothersFor corporate and others

-

-

-

-

-

-

-

-

-

-

-

-

Mortgage loans

-

-

-

-

Securitization

-

-

-

-

Others

-

10

-

10

-

10

-

10

Total

FY2021
Financial asset
collateral(¥100 million)

Guarantees

Credit derivatives

Total

Standardized Approach
For sovereign
For financial institutions andothersFor corporate and others

-

-

-

-

-

-

-

-

-

-

-

-

Mortgage loans

-

-

-

-

Securitization

-

-

-

-

Others

-

10

-

10

-

10

-

10

Total

(4)

Counterparty risk in derivative and long-term settlement transactions: Not applicable.

(5)

Securitization exposure: Not applicable.

(6)

Market risk
Our Company does not include market risk equivalents in the calculation of its capital
adequacy ratio.

(7)

Risk of equity exposures○ Balance sheet amounts and fair value
FY2020

FY2021

Balance sheet amount

Fair value

Listed equity exposures-

Equity exposures other than above

5

Total

5

(¥100 million)

Balance sheet amount

Fair value

-

-

-

-

5

-

-

5

-

○ Gains/losses on sale and redemption of capital contribution or equity exposure
FY2020

FY2021

Gain/loss on
saleSale of equity exposures

5(¥100 million)

Gain/loss on
saleGain onsale
5

Loss onsale--

Gain onsale-

Loss onsale-○ Amount of gain or loss by write-offs and unrealized gain or loss in relation to equity
exposures
Not applicable.

51

○ Unrealized gains/losses recognized in the balance sheets and not recognized in thestatements of income
Not applicable.
○ Unrealized gains/losses not recognized in the balance sheets and the statements ofincomeNot applicable.
(8) Interest rate risk
IRRBB1: Interest rate risk(¥100 million)⊿EVE

Item No.
FY2020
1
2
3
4
5
6
7

Parallel shift up
Parallel shift down
Steepening
Flattening
Short-term rates up
Short-term rates down
Largest8

Amount of Core Capital

1,282△1,282
1,282
FY202075,504⊿NII
FY2021
716
△ 716
716

FY2020
FY2021△ 2,015△ 1,545
2,015
1,545
2,015
1,545
FY202170,873Disclosure of Compensation, etc.
This section shall relate to compensation, etc. based on the provisions of Article 19-2, Paragraph 1, Item 6, etc.
of the Ordinance for Enforcement of the Banking Act (Ordinance of the Ministry of Finance No. 10 of 1982), anddisclose the case specified separately by the Commissioner of the Financial Services Agency as a matter that
may have a material impact on the status of business operations or assets of banks, etc. (Financial Services
Agency Notification No. 21 of 2012).
1. Matters related to the development of organizational structure for compensation, etc. ofApplicable Officers and Employees of our Company(1) Scope of “Applicable Officers and Employees”
The following shall describe the scope of “Applicable Officers” and “Applicable
Employees, etc.” (collectively referred to as “Applicable Officers and Employees”) set
forth in the compensation notification to be disclosed.
1) Scope of “Applicable Officers”
Applicable Officers include our Company’s Directors and Corporate Auditors,
excluding external Directors and Corporate Auditors.
2) Scope of “Applicable Employees, etc.”
Of officers and employees who are not Applicable Officers, our Company shallsubject “Persons receiving a high amount of compensation, etc.” and having amaterial impact on the business management or financial condition of ourCompany and the major consolidated subsidiaries to disclosure as “Applicable
Employees, etc.” Information on our Company’s consolidated subsidiaries isomitted as there are no such companies.
There are no “Applicable Employees, etc.” among officers and employees otherthan “Applicable Officers” at our Company.
(A) Scope of “Persons receiving a high amount of compensation, etc.”
Persons receiving a high amount of compensation, etc. shall refer to those
who receive compensation, etc. exceeding the threshold amount from ourCompany. Our Company has set the threshold amount at ¥24 million. The
standard amount is set based on the average amount of compensation forApplicable Officers of our Company.

52

(B)

(2)

Scope of “Person having a material impact on the business operations or
financial condition of our Company”
A “Person having a material impact on the business operations or financial
condition of our Company” shall refer to a person whose transactions conductedor matters managed in his/her usual course of business have a considerable
impact on the operation of our Company’s business or whose transactions, etc.
could cause loss with a significant impact on the financial condition of ourCompany.

Determination of compensation, etc. for Applicable Officers and Employees
1) Determination of compensation, etc. for Applicable Officers
At our Company, the General Meeting of Shareholders determines the total
amount of compensation (the maximum amount) for officers. The Board of
Directors is wholly trusted with the allocation of compensation to individual
directors resolved by the General Meeting of Shareholders. Allocation ofcompensation to individual Corporate Auditors is wholly determined byconsultation among Corporate Auditors.

2. Matters concerning the evaluation of the appropriateness of the design and operation of
the system for compensation, etc. for Applicable Officers and Employees of ourCompany(1) Policies concerning compensation, etc.
1) Policies concerning compensation, etc. for Applicable Officers
At our Company, the General Meeting of Shareholders determines the
maximum total amount of compensation for officers. Directors’ compensation is
resolved by the Board of Directors, and Corporate Auditors’ compensation isdetermined by consultation among Corporate Auditors within the limit of the total
amount of compensation resolved by the General Meeting of Shareholders.
3. Consistency between our Company’s compensation system for Applicable Officers andEmployees and risk management, and linkage between compensation, etc. andperformance
There is a mechanism in place where the total amount of compensation for all officers
is resolved by the General Meeting of Shareholders, in determining compensation, etc.
for Applicable Officers. In determining compensation, etc., a budget is set aside with ourCompany’s financial condition and other factors taken into consideration.
4. Types, total amount and payment method of compensation, etc. for Applicable Officers
and Employees of our Company
Total amount of compensation, etc. for Applicable Officers and Employees of ourCompany (from April 1, 2021 to March 31, 2022)(¥ million)

Category

Applicable
Officers(excluding
external officers)

Numberofpersons

Total
amount ofcompensation,
etc.

6

146

Total amountBasicof fixed
compencompensation
sation146

146

Total amountof variable
compensation

Stock
option--Bonuses

Retirement
benefits--

5. Other reference matters related to the system of compensation, etc. for the Applicable
Officers and Employees of our Company
There is no particular matter applicable other than those listed in the preceding
paragraphs.

Consolidated Information
As our Company has no subsidiaries, consolidated accounting is not implemented.

53

List of items fordisclosure
Ordinance for Enforcement of the Banking Act
1.

・ Balance of loans to SME and the proportion in total amountof loans
・ Balance of specific foreign claims by country, which
account for 5% or more of the total
・ Year-end and average loan-to-deposit ratios

Overall Business and Organization
○
○
○
○
○
○

Management organization
List of major shareholders
Management
Name of Accounting Auditors
List of offices
Matters concerning bank agent(4) Indicators for securities, etc.
・ Average balance of trading account securities by type・ Balance of securities by type and average life
・ Average balance of securities by type・ Year-end and average security-to-deposit ratios(5) Indicators for trust business2. Key Business・ Balance table of assets in trust・ Balance of money trusts, etc.
・ Balance by type of trusts with principal-guaranteed features・ Balance of principal of money trusts and loan trusts by trust
period・ Balance of loans by type of money trusts, etc. and balanceof investment by security category
・ Balance by loan item related to money trusts
・ Balance of loans pertaining to money trusts, etc. bycontract period・ Balance of loans pertaining to money trusts, etc. by type ofcollateral・ Balance of loans pertaining to money trusts, etc. bypurpose・ Balance of loans pertaining to money trusts, etc. byindustry and the proportion in total amount of loans
・ Balance of loans pertaining to money trusts, etc. for SME
and the proportion in total amount of loans
・ Balance of securities pertaining to money trusts, etc. by
type

3. Matters concerning Key Business○ Business overview in the latest business year
○ Indicators showing the status of key business in the last 5 business
years
・ Ordinary income
・ Ordinary profit or loss
・ Net income or loss・ Capital and total number of shares issued
・ Net assets
・ Total assets
・ Deposits
・ Loans・ Securities
・ Non-consolidated capital adequacy ratio
・ Dividend payout ratio
・ Number of employees
・ Fiduciary fees
・ Trust account loans

4. Matters concerning Business Operation○ Risk management structure○ Management structure for legal compliance○ Initiatives to improve the management of SMEs and revitalize
local communities○ Name of designated dispute resolution organization

・ Trust account securities(Excluding trust account, electronically recorded, transferred-rights
securities)
・ Trust account, electronically recorded, transferred-rights securities
・ Total entrusted assets○ Matters shown in a separate table as indicators showing the status ofbusiness in the last 2 business years(1) Indicators showing the status of key business・ Gross business profit, gross business profit margin, net businessprofit, effective net business profit, net business profit from core
operations, and net business profit from core operations (excluding
gain or loss on cancellation of investment trusts)
・ Net interest income, net fees and commissions, net trading income,other net operating income
・ Average balance, interest, yield and net interest margin of interestearning assets and interest bearing liabilities
・ Increase or decrease in interest income and expenses
・ Ordinary profit to total assets and ordinary profit to capital・ Return on assets and return on equity(2) Indicators for deposits
・ Average balance of liquid deposits, time and saving deposits,
negotiable certificate of deposits, and other deposits
・ Balance of time deposits by average life(3) Indicators for loans, etc.
・ Average balance of loans on bills, loans on deeds, overdrafts, anddiscounted bills
・ Balance of loans by average life
・ Balance of loans by type of collateral and customers’ liabilities for
acceptances and guarantees
・ Balance of loans by purpose
・ Balance of loans by industry and the proportion in total amount of
loans

54

5. Matters concerning Status of Assets in Last 2 Business
Years○ Balance sheets, statements of income, and statements ofchanges in net assets○ Amounts of risk-monitored loans and claims disclosed
pursuant to the Financial Rehabilitation Act○ Amount of risk-monitored loans for trusts with principalguaranteed features○ Capital adequacy status○ Fair value information on securities, money in trust, andderivative transactions○ Allowance for loan losses at fiscal year-end and theincrease/decrease during fiscal year
○ Amount of write-off of loans○ Auditors’ Statement

6. Matters related to Compensation, etc.
7. Consolidated Information

The Ordinance for Enforcement of the
Act on Emergency Measures for the
Revitalization of the Financial
Functions○

Asset assessment status
・ Ordinary loans
・ Claims under close monitoring・ Doubtful claims
・ Claims to bankrupt and substantially bankrupt debtors

MEMO

56

MEMO

DISCLOSURE 2022
The document is a disclosure material prepared in accordance with Article 21 of the
Banking Act.
Published

July 2022
Corporate Planning Department, Custody Bank of Japan, Ltd.
8-12, Harumi 1-chome, Chuo-ku, Tokyo, 104-6228
TEL 03-6220-4000
Website https://www.custody.jp/
Mixed
Paper | Supporting
responsible management offorests

Financial Data

58